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ECONOMY | 27-01-2024 10:04

Javier Milei shelves austerity plan as Argentina's Congress debates bill

Main austerity measures in president's sweeping reform bill to be culled in order to get it through Congress, implying deeper spending cuts in the future.

Argentine President Javier Milei ditched the main austerity measures in his sweeping reform bill in order to get it through Congress, implying deeper spending cuts in the future, Economy Minister Luis Caputo said Friday.

“We will give ourselves a little more time to figure out what we can do better for Argentines on the fiscal side without ever giving up on the concept of reaching our goal of zero deficit,” Caputo said at a press conference Friday evening from the Casa Rosada presidential palace.

The bill’s fiscal chapter, which Caputo said would be removed entirely, included tax hikes on major exports such as soy derivatives, grains and corn. The government is also leaving out a planned reformulation of pensions, and an income tax increase. 

The tax and pension measures had represented the biggest obstacles to the bill’s passage. 

Milei’s bill, which also seeks to privatise dozens of companies and expand his executive powers on economic matters, narrowly passed three congressional committees this week. It was backed by 55 lawmakers, with 34 of them expressing partial disagreement, according to a statement from Congress. That left open the possibility of their voting against the bill had its most controversial proposals remained unchanged.

On Wednesday, tens of thousands of Argentines protested in Buenos Aires against Milei’s austerity measures, in demonstrations organised by the country’s powerful labour unions.

With the tax chapter out of the way, Caputo said the bill would make it past the finish line in Congress. The executive branch had reached a “clear consensus” on the most important parts of the bill outside of the fiscal chapter, Caputo said, which includes the privatisation of dozens of companies — excluding oil company YPF SA. 

The more than 500 articles that remain represent a “structural change” in Argentina that will allow the economy to grow, Caputo said. 

Argentina’s lower house Chamber of Deputies is expected to vote on the bill as early as next Tuesday.

Caputo also confirmed to reporters that he would take over the responsibilities of Guillermo Ferraro, who was fired as Infrastructure Minister this week. 

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by Manuela Tobias, Bloomberg

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