Argentina's economic situation has continued to deteriorate over the past few decades, especially inflation of up to 160 in 2023, low foreign exchange reserves, and a sharp depreciation of the Argentine currency in US dollar terms77With 89% of the peso, the economic growth rate is the lowest among Latin American countries (-3% expected), and it is also burdened with a debt of $44 billion from the International Monetary Organization**. These figures mark the point where the country's ongoing economic recession has reached a point where it is unsustainable. Against the background of everyone in Argentina, Javier Milley, a right-wing ** who took office at the beginning of his office in December last year, prescribed Argentina a fierce medicine of "shock **" with unruly and messy hair.
The first step is to liberalize and deregulate the economy. On December 20 last year, Milley signed a large-scale decree aimed at radically liberalizing the Argentine economy, the core of which was a large-scale deregulation of the economy and a drastic reform of the country's ministries and agencies to reduce the cost of running the country, from the original 18 to nine. Milley also estimated that more than 5,000 staff members would be laid off this year. "I have signed the necessary Emergency Decree (DNU) to abolish the oppressive legal framework that is putting our country down," Milley said. "Among the 30 main measures announced by the emergency decree are the repeal of the Tenancy Law, allowing the real estate market to return to normal operation and simplifying renting; Repeal the ** Act so that the state no longer infringes on the property rights of individuals; Repeal the Shelf Law, so that the state no longer interferes with the decisions of merchants, etc.
In addition, Argentine Economy Minister Luis Caputo announced the lifting of import restrictions on social ** platforms on December 26 last year. Caputo said, "We are normalizing the import process from today,......The bureaucracy will no longer have the power to decide who can import goods. "This measure has a direct impact on small and medium-sized enterprises, which will operate predictably, saving time and costs......."From today, it will be possible to import without quotas or product bans. ”
A few days ago, Argentina** submitted a general reform bill to Congress, which proposes to eliminate the tax on goods for personal use when travelers enter the country, even if the goods exceed the current limit of 500 US dollars. Argentina** will once again allow the export of seven domestically "popular" cuts of beef: bone-in steak, brisket, cartilage, belly, boneless steak, rump and shoulder-deboned. Argentina had previously passed Decree 911 21, which banned the export of the above-mentioned cuts of beef. Argentina's beef exports in 2023 totalled 920,000 tonnes with an export value of nearly $2.7 billion, according to calculations by the Argentine Beef Export Group (ABC).
The second step is to privatize state-owned assets and reduce the financial burden. The emergency decrees signed by Milley included "repeal regulations that prevent the privatization of public companies; abolishing the state-owned enterprise management system; Conversion of all state-owned enterprises into *** for subsequent privatization; authorizing the full or partial transfer of Aerolíneas Argentinas' shares". Recently, the Argentine Football Federation will use the Viamonte building, the proceeds of which will be used to complete the construction of the Ezeiza Sports City and relocate all the facilities there. Argentina** also announced a 50% reduction in drivers and fleet of drivers in the national public administration, while also using two aircraft that are "almost exclusively used by politically privileged individuals".
The third step is to negotiate debt repayment and refinancing plans with international organizations and foreign banks.
Official Argentine sources said on December 14 last year that Milley was in talks with multilateral organizations on financing to increase central bank funding until a large-scale liquidation of agriculture began in April 2024. Milley** will also serve as an anchor by lowering the official exchange rate to 800 pesos per dollar and setting a target of a 2% monthly depreciation of the peso. The ultimate goal pursued by Milley's economic team is to achieve macroeconomic equilibrium with a view to the harmonization of exchange rates and the removal of capital controls. To this end, the first step of the plan is to "correct the huge distortions of the relative **" and put an end to the fiscal dominance of monetary policy in the medium term, that is, the Central Bank of Argentina will need to assist the Ministry of Finance in financing. Milley has set a target of achieving a fiscal surplus in 2024. In addition, on January 2, Argentine ** spokesman Adoni confirmed that on the 4th, Argentine Cabinet Minister Pose and Economy Minister Caputo will welcome a visiting delegation of the International Monetary Organization (IMF) to discuss Argentina's $44 billion debt refinancing plan. If the agreement is reached, Argentina will continue to receive the next tranche of $3.3 billion in loans from the organization.
On January 4, Argentine Economy Minister Caputo and Finance Minister Quirno met with representatives of local and foreign banks doing business in Argentina to introduce them to the debt swap program. It was revealed that Argentina will issue new peso bonds in February in exchange for bonds due in 2024. If the swap is successful, it would be the largest domestic debt rollover in Argentina's history.
Give me 20 years and we will be Italy. In 35 years, we will be American. Milley made a bold statement in his victory speech. Whether Milley can really "make Argentina great again" will take time to test. And the test is coming soon. On January 3, an Argentine court issued an injunction suspending the content of more than 300 economic reforms proposed by Milley that involved labor reform. The judge held that Milley** had exceeded his power by unilaterally enacting the Labour Reform Act without prior discussion and approval by Congress. At the same time, trade unions in Argentina insist that the reforms violate workers' rights and undermine the most basic protections for workers, and plan a national strike on January 24.
Argentina's shock** suffered a major setback at the start of the new year. How did Milley get the Argentines to continue to drink this "shock**" drug? The world is waiting to see.
Reporter Lu Hong.