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ECONOMY | 27-11-2023 20:46

Milei to send ‘shock’ package to Argentina’s Congress on day one

President-elect plans to call Congress into an extraordinary session and send a large package of reforms to stabilise Argentina’s economy on December 11, the day after his inauguration.

President-elect Javier Milei plans to call Congress into an extraordinary session and send a large package of reforms to stabilise Argentina’s economy on December 11, the day after his inauguration.

“This is urgent,” he said in an interview broadcast Sunday by LN+ TV, adding that Argentina can’t wait for the usual start of congressional sessions in March. “Solving the Central Bank’s problems as soon as possible” and stopping money printing that causes inflation are among the urgent issues he intends to tackle with lawmakers, he said.

Once his government gets public finances and the Central Bank balance sheet in order, it will be able to start lifting capital controls and unifying the country’s diverse exchange rates, Milei said, repeating that he never promised to close the Central Bank on day one. 

The positive market reaction to Milei’s win in the November 19 run-off, evidenced by a rally of sovereign bonds and YPF’s debt, emboldened the libertarian economist to pursue his “shock therapy” agenda of fiscal adjustment.

“This has given us greater strength to redouble our bets in favour of fiscal order,” he said, adding the market read the signs his incoming government sent “to perfection.”

“If the financial markets accompany us and interest rates fall, this will be painful but a lot less painful,” he said of the impact of the spending cuts his government proposes — a key concern in a country where more than 40% of the population lives below the poverty line.

 

First trip abroad

Milei recorded his interview before departing for the United States, the first time he leaves the country since his election win. The president-elect will first meet a rabbi in New York, as part of a “spiritual” trip to give thanks for his victory. On Friday, he received a blessing from another rabbi in Argentina.

Then Milei heads to Washington to meet with officials from the Treasury, the White House and the International Monetary Fund. Luis Caputo, the former Central Bank chief leading his economic transition team, is accompanying him.

“There is no better financial expert in Argentina,” Milei said in the interview, adding that Caputo had a meeting with 20 bankers “and they all came out happy.”

Milei said he’s asking for a rollover of Argentina’s debt repayments to the IMF “to put on track an accord that is very damaged.” The US$43-billion programme with the Fund, as well as Argentina’s fiscal, monetary and currency issues were among the topics discussed during an hour-long teleconference with Managing Director Kristalina Georgieva, he said. 

“Today my priority is to avoid hyperinflation,” Milei said in the interview, adding he would utilize all the tools at his disposal to provide a solution.

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by Manuela Tobias, Bloomberg

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