2023-12-27 08:10:00
Faced with the crowd of Argentines gathered in front of the steps of Congress in Buenos Aires, on December 10, 2023, just after being invested, Javier Milei used his outspokenness for his first official speech: “I owe it to you to repeat, there is no more money. » More money in the coffers of the Argentine state, forced to finance its budget deficit by issuing currency, generating galloping inflation.
From the first days of his mandate, the new liberal head of state slashed public spending and tried to revive the private sector as an engine of growth. Barely entering the Casa Rosada, he devalued the official peso by more than 50% so that it was closer to the unofficial peso, unveiled a battery of measures intended to eradicate inflation of more than 160% which is destroying power purchase of Argentines and signed an emergency decree in order to deregulate the economy. This text modifies or repeals more than 300 standards, including labor law, rent control, and price controls in supermarkets. It also allows the possible privatization of certain companies deemed inefficient, such as the airline Aerolineas Argentinas, today largely subsidized.
Call to demonstrate Wednesday December 27
Parliament was convened in extraordinary session from December 26 to January 31 to examine and approve or reject Javier Milei’s measures. The president’s liberal party, La Libertad Avanza, holds around 40 seats out of 257 in the Lower House and its ally, the center-right coalition Juntos por el Cambio, has 108 seats. The union confederations called for demonstrations on Wednesday, December 27 in front of the courts to demand that the courts declare the president’s emergency decree unconstitutional.
“Javier Milei’s first steps are those that any other president would have taken upon coming to power given the disastrous situation in the country. Namely a budgetary adjustment and a “sincerization” of prices. They show the pragmatism of Milei, who gave up dollarizing as he promised during the presidential campaign. Inflation should initially increase due to the rise in certain prices, before declining,” estimates Argentine political scientist Ignacio Labaqui.
Flexibility of labor law
In order to make the labor market more flexible, the trial period for Argentine workers would increase from three to eight months and compensation for dismissal would be capped. An employer would have the right to dismiss an employee who blocks his workplace. Javier Milei also wants to put an end to the recurring road cuts in the country, the “ pickets », particularly in Buenos Aires, where the city center is regularly disrupted by a demonstration. He intends to give the police the means to dislodge those who resist. And he warns the organizers of an undeclared demonstration: it will now be up to them to pay the bill for the security forces for the procession. And that demonstrators benefiting from a social assistance plan will have it suspended.
The State wants to set an example for its population by tightening its belt. Ministries have been reduced from 18 to 9, secretariats and general directorates will go from 106 to 54, or “a 34% reduction in state political positions”, according to the Minister of Economy, Luis Caputo. For Javier Milei, any saving of public money is a good thing. No more mega public contracts. The State will no longer present offers for public projects, and cancel past contracts which have not already started. “Infrastructure projects in Argentina will be carried out by the private sector, because the State has neither money nor financing to carry them out,” said Luis Caputo.
End of official advertising in newspapers
Local media will have to do without government advertising, suspended for a year. They cost 34 million pesos, or around 2 million euros this year. It will be interesting to see how their editorial line will evolve following this announcement, in particular the two most powerful dailies, The nation et Clarin.
Another measure to put an end to the prices of electricity and public transport, which has led concessionary companies not to invest: the State is reducing public subsidies for transport and energy, announced Mr. Caputo, without detailing a timetable or minimum objective. “The state artificially supports very low prices through these subsidies, to make people believe that they have money, but […] it is not free and people pay for it in inflation,” explained the Minister of the Economy.
Maintaining social programs
To cushion this social shock of the measures, Luis Caputo announced the maintenance of social programs, such as assistance with access to employment, and will “strengthen social policies received directly by those who need it most, without intermediaries”. “Food cards” (purchase vouchers for the most deprived) will increase by 50%, and the universal family allowance will also double.
“It’s going to be worse than before for a few months” but “it’s the way to go,” insisted Luis Caputo. It remains to be seen whether the Argentines who largely voted for Javier Milei (who won by 3 million votes over the Peronist Sergio Massa) will hold on and accept his unprecedented efforts. The most vehement trade unionists, such as the CGT, monopolized by the Moyana family for years, and the Workers’ Party (partido obrero) began to mobilize their base. Often bad losers, the Peronists could also raise the threat of a social explosion.
The start of the summer holidays in the southern hemisphere may work in favor of the new government, resulting in a lull. At least until the end of February, which corresponds to the end of August in France. A very difficult game will then be played out, which takes place every year in Argentina: salary renegotiations, particularly for teachers. “Argentina is going to have a very difficult four to six months. For now, Javier Milei is very popular and has the support of his electoral base. But he must avoid confronting Congress if he wants to succeed,” continues Ignacio Labaqui.
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