Argentina’s Congress yesterday approved Argentine President Javier Milei’s economic reform package after months of debate.
“We are going to give President Milei’s government the tools to reform the state once and for all,” ruling bloc head Gabriel Bornoroni said in his closing speech.
Milei said that the package was “the greatest fiscal adjustment not only in Argentine history, but in the history of humanity.”
Photo: AFP
His government has applied a fiscal austerity program with the aim of achieving “zero budget deficit” by the end of this year to tame chronic inflation.
Politically, the approval means “a total success for the government,” political scientist and economist Pablo Tigani told reporters.
However, in the economic sphere, “it will be a return to the policies of the 1990s, with deregulation, privatization and the unconditional opening up of the economy, which will deal a heavy blow to industry, and to national small and medium-sized enterprises,” Tigani said.
The Chamber of Deputies passed the bill early in the morning in a 147 to 107 vote.
The biggest victory came minutes later when lawmakers also approved the return of income taxes in the accompanying fiscal package in a 136-116 vote, reversing the Argentine Senate’s bid to undo the measure.
The extra tax revenue would give the government breathing room to reach its fiscal targets and help tame 276 percent annual inflation.
Milei’s nascent libertarian party holds less than 15 percent of seats in the lower house, making legislative support his Achilles heel.
The passage of the reform package after six months of negotiations sends a business-friendly message to investors that he has the political backing to get Argentina’s economy back on track.
Investors and the IMF were keenly watching whether lawmakers could save the tax chapter of the fiscal bill after senators attempted to remove it.
Its passage means Milei “has some willingness and ability to compromise with the political establishment,” said Marcelo Garcia, Latin America director at New York-based consultancy Horizon Engage.
“Investors and the IMF would want to see more of this in the second half of the year, and hopefully at a faster pace,” he said by text message.
Additional reporting by Bloomberg
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