Wednesday, July 17, 2024

ARGENTINA | 02-02-2024 19:20

Argentina's lower house of Congress approves Milei’s omnibus bill

In a 144-109 vote, lawmakers passed President Milei’s first major piece of legislation after he made significant concessions. The bill could still be modified significantly, however.

Argentina’s lower house of Eongress approved President Javier Milei’s omnibus reform package Friday afternoon, passing the first test of his ability to govern with an opposition-controlled legislature.

In a 144-109 vote, lawmakers passed Milei’s first major piece of legislation after he made significant concessions. The bill could still be modified significantly, however, as its hundreds of articles are subjected to a round of individual votes next week following the so-called "general vote."

With his party controlling less than 15 percent of the lower house, the libertarian economist counts on the support of the pro-business PRO party and two more moderate parties and their allies — Uniön Cívica Radical and Hacemos por Nuestro Pais — to push through his reforms. In an early vow to win their approval,

Milei scrapped the key privatization of oil company YPF SA and reduced the scope and duration of the emergency powers he gave himself.

The newest version of the bill is poised to exclude many more state companies from privatisation from an original list of 41 and further strip emergency executive powers, according to a draft version of the legislation shared with Bloomberg News. Milei’s sister and adviser, Karina, personally went to Congress Thursday night to negotiate last-minute changes with lawmakers.

Economy Minister Luis Caputo announced last week that the government would shelve the entire fiscal portion of the bill — equivalent to about 1.8 percent of gross domestic product — after vehement opposition to his export duties and changes to the pension formula. Allied lawmakers argued the articles would hurt farmers and retirees, so the government threw its austerity measures out in full, including a measure that would have broadened the tax base, and vowed to bring some of them back at a later date.

Instead of scorn, Milei won praise on the aggressive pivot from International Monetary Fund, with which it has a record US$44-billion programme. Managing Director Kristalina Georgieva lauded the move as “pragmatic” Thursday and affirmed the government had a contingency plan in place to reach the Washington-based lender’s ambitious target of running a 2024 primary surplus equivalent to two percent of gross domestic product. 

The omnibus package will later head to the Senate for another round of fierce debate, where Milei’s party holds only about 10% of the seats. If passed there, the reforms would still mark a significant victory for the president less than two months into his term. 

Earlier, the president issued a sprawling presidential decree deregulating vast swaths of the economy that remains in place, save for a key chapter on labor reform that was ruled to be unconstitutional.

At Milei’s insistence, the lower house participated in back-to-back marathon debates this week that ran late into the night during extraordinary sessions, a rarity in the high heat of the Argentine summer when lawmakers normally break for recess. While the opposition Uniön por la Patria denounced closed-door negotiations, allied bloc members expressed overall sympathy for the government that won 56 percent of the popular vote — while watering down its key measures.

Protesters rallied outside Congress Thursday night ahead of Friday’s vote, with police confronting the crowd using tear gas and rubber bullets.

The security measures are part of an aggressive policy set by Security Minister Patricia Bullrich to prevent protesters from blocking streets, once a mainstay of local politics.

by Manuela Tobias & Patrick Gillespie, Bloomberg


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