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ARGENTINA | 01-05-2024 10:49

Five key points from Milei’s 'omnibus' reform package

What is the massive reform bill pushed by Argentina’s President Javier Milei like? And what does it contain?

What is the massive reform bill pushed by Argentina’s President Javier Milei like? And what does it contain?

A trimmed-down version of the bill – commonly called the ‘omnibus’ bill and formally known as the ‘Ley de Bases y Puntos de Partida para La Libertad de los Argentinos’ – was approved on Tuesday by the lower house Chamber of Deputies, but it still faces debate in the upper chamber, the Senate.

Here are five key points contemplated in the bill, which is essentially designed to deregulate Argentina’s economy, and its accompanying fiscal package.

 

 

Delegated powers

The bill declares an administrative, economic, financial and energy emergency for a year and grants Milei special powers to legislate in those areas.

This is one of its most controversial points and was a key factor in the massive original’s failure in Congress back in February, after which it was referred back to national deputies with amendments.

The opposition claims that, even in its current version, the bill entails the granting “all of public authority” to the Executive branch. 

Critics warn that it enables the modification or elimination of jurisdictions, functions and sweeping powers to control the number of employees at decentralised government bodies, such as the CONICET scientific research council and the INCAA national film institute, among many others. Milei has already ordered massive lay-offs at these institutions.

“The idea here is to delegate power to someone who, evidently, hates the State,” complained Peronist deputy Blanca Osuna. 

Caucuses backing the ruling party pointed out that previous governments and heads of state also received similar powers via congressional vote.

 

Privatisations

Milei’s bill would enable the president to kick-start the privatisation process of around a dozen state-run companies, including flagship airline Aerolíneas Argentinas, water utility firm Agua y Saneamientos, and other communications, transport and energy firms. This also includes the partial privatisation of Nucleoeléctrica, the company in charge of nuclear power plants in Argentina

In its original version, the law contemplated the possibility of almost 40 state-controlled firms, but the government’s aims were trimmed down in negotiations.

 

Investment

The so-called ‘Régimen de incentivo a las grandes inversiones,’ or RIGI (“Regime of incentive for big investments”), contained in the bill, seeks to promote the arrival of foreign capital by offering tax, customs and foreign exchange benefits.

The move has caused controversy in several sectors: members of the Argentine Industrial Union pointed out that the measure excludes small- and medium-sized enterprises and harms national industry, whereas the Financial Action Task Force (FATF) stated that the plan would provide a “gateway” for “capital from drug, arms and human trafficking.”

Veteran dissident Peronist Miguel Ángel Pichetto, an experienced national deputy who lent the support of his Hacemos por Nuestro País caucus to secure the bill’s passage, claims that the RIGI scheme “is for mining, oil and gas operations, and these are the investments that Argentina needs.”

He called for a demystification of the “issue of handing over national heritage,” complaining about critics’ complaints.

 

Labour reform

Reforms to labour legislation contained in the bill extends to probationary periods for new employees, which will rise from three to six months and even a year in some cases. It also strips away penalties for companies who employ unregistered workers off-the-books to incentivise registration. It also proposes the implementation of an unemployment fund to replace the current system of severance pay.

Current retirement benefits are repealed and a new scheme is created which means that those without 30 years of contributions to the national system are only entitled to a pension payment of 80 percent of the minimum level. 

The fiscal reform package also determines, among other measures, that wage-earners with an income over 1.8 million pesos a month (around US$2,000 at the official exchange rate) will again return to paying income tax – a levy which was repealed in 2023 with a supporting vote from, among others, then-national deputy Javier Milei.

 

– TIMES/AFP

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