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ARGENTINA | 29-11-2023 19:53

Breaking promises? Assessing eight key announcements from Javier Milei

Argentina's new president-elect has confirmed or corrected a number of announcements and policy promises made during his electoral campaign. Here's where we stand.

Argentina's new president-elect Javier Milei has confirmed or corrected a number of announcements and policy promises made during his electoral campaign since winning this month's election.

Here's where we stand so far.

 

YPF state energy firm 

Javier Milei has announced that he will move forward with the planned privatisation of Argentina’s state energy firm YPF and sent off alarms, despite the company’s shares being bullish. 

Amid the various Cabinet rumours floating around, Milei subsequently confirmed the appointment of Horacio Marín as head of the company, an industry veteran close to businessman Paolo Rocca. 

The president elect stated the company must first be rebuilt and value added to it before then privatising the shares held by the State. YPF is a corporation quoted on the New York Stock Exchange, but 51 percent of its shares are owned by the Argentine State.

 

Federal revenue-sharing funds

The president-elect toyed with the idea of eliminating federal revenue-sharing (coparticipación) during the campaign. However, he had to go back on the premise. 

“In order to modify revenue-sharing, the Senate has to pass it unanimously; you needn’t be afraid. I couldn’t change revenue-sharing, the 1994 Constitution requires a new Revenue-Sharing Law, and there are characteristics designed to amend that law which keep it from happening,” said Milei, acknowledging he is in no position to do so. 

Those statements brought a sigh of relief to governors, who are claiming income tax and IVA value-added tax compensation today.

 

Public works projects

“Public works are over, we have no money” – thus Milei previously warned that Argentina has no budget and that he is willing to cut off public works entirely.

The statement concerned the corporate sector and provincial governors, which could have the works in their districts paralysed. 

Guillermo Ferraros, the man appointed by Milei to head the new Infrastructure Ministry did not elaborate on this. The head of the local construction chamber, Gustavo Weiss, said publicly that the first dismissal notices are already coming. 

From the current ministry, headed by Gabriel Katopodis, they claim that 250,000 direct jobs will be lost under the scheme.

 

Central Bank shuttering

“The closing of the Central Bank is non-negotiable.” A recent post from the new X account in Milei’s name – the Office of the President-Elect – indicates that the shuttering of Argentina’s monetary institution is still part of his plans.

Dollarisation, however, seems to be off the table, at least for now, after Emilio Ocampo stepped back as candidate for governor of the Central Bank. 

Milei’s team may have avoided talking about the dollarisation plan in their statement, but the idea is being insisted upon. If they move forward with it, there would likely be problems with the banking sector.

 

Aerolíneas Argentinas flagship carrier

Like many other companies owned by the state, Milei intends to privatise flagship carrier ​​Aerolíneas Argentinas. 

In this case, the president-elect’s plan is to transfer the shares to the company’s workers, who today have a minimal portion of the shares. 

According to Milei, Aerolíneas Argentinas ought to compete in an “open skies” scheme. The libertarian even praised the firm’s current staff by saying that they are “highly qualified” employees and “profitable business units.”

Union sector leader Pablo Biró sent a tough warning he had to take back. Aerolíneas Argentinas has 11,920 workers. It is unknown how many could lose their jobs.

 

Trenes Argentinos

Milei has been insistent that what can be privatised, will be. “Anything that can be in the hands of the private sector will be in the private sector, because it has been proven that everything the public sector does is wrong,” he once said.

He is publicly sticking to that stance for now. That is why he is still planning to privatise Trenes Argentinos, as stated in a recent television interview, although he did not provide further details on how he would carry it out.

 “When they were in private hands, we had the best railways in the world,” said the president-elect. 

Argentina’s railways were sold-off in the 1990s.
 

State media

During multiple interviews since he has been elected, Milei has reiterated that he will move forward with privatising public media. This includes Televisión Pública, Radio Nacional and the Télamstate news agency, among others. 

In the case of media which belongs to the State, Milei’s plans must be endorsed by Congress. A simple majority will suffice, although La Libertad Avanza is far from reaching those numbers. 

Even before the run-off last Sunday, libertarian leader Ramiro Marra joked about selling the premises of Televisión Pública and erecting a new building there. The company has 2,500 employees.

 

Foreign exchange restrictions

President-elect Milei has not set a date for the lifting of the infamous ‘cepo’ web of currency controls regulating the purchase of foreign currency. 

What he has made clear is that before he does so, he must solve the issue of the Leliqs today being held by the banking system. To that end, he is working with Luis “Toto” Caputo on a plan which involves taking on debt in foreign currency in order to swap debt in legal tender for debt in dollars in a non-compulsory fashion. 

On the day of the run-off, Milei assured that he would observe contracts, which is why, in principle, the possibility of implementing a kind of Bonex bond plan is ruled out.

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