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Argentina passes economic reform bill in Milei's first big legislative win

The two bills have been changed significantly since the government's initial drafts as it has negotiated to win allies in Congress where it only has a small minority of seats.
Last Updated : 28 June 2024, 10:00 IST

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Buenos Aires: Argentina's Congress early on Friday approved economic reform measures proposed by President Javier Milei, giving him his first big legislative win just over six months after taking office.

The final discussions regarding Milei's primary reform bill and its fiscal counterpart began on Thursday in the lower Chamber of Deputies. With initial approval already secured, the focus of the debate was on agreeing final details before the measures become law.

The legislation, which provides investment incentives, deals with the privatization of a range of state-owned entities and rejigs taxes, will achieve some of the main objectives set by Milei, who won election last year pledging to shake up the country's troubled economy. In a social media post, the Argentine government celebrated the approval of the economic reforms, criticizing the opposition and its "usual accomplices" for delaying the project for months.

The two bills have been changed significantly since the government's initial drafts as it has negotiated to win allies in Congress where it only has a small minority of seats.

"It has suffered a significant pruning if you look at the original bill," local investment firm Wise Capital said. "But the ruling party is going be able to get approved a framework that allows it to implement the measures it considers necessary to rebuild the Argentine economy."

Milei, who inherited an economic mess with triple digit inflation, negative net foreign currency reserves and a sliding economy, has focused hard on getting the state's finances in order with tough austerity. He's had success tamping down price rises, rebuilding reserves and posting a fiscal surplus, though the economy been hit hard.

After approvals by Deputies in April and Senators this month, the lower chamber will now vote on the changes made in the Senate. It is expected to accept a reduced list of state firms to privatize and tweaks to the investment incentive plan.

The government is however hoping to reinstate some articles on taxation and personal assets that were removed in the Senate.

Center-left opposition legislators have said that they could turn to the courts to stop certain laws being put into action that they say border on "unconstitutionality."

Opinions divided

Argentines on the street are divided.

Samanta Monrroi, a 34-year-old worker in Buenos Aires, was concerned about the tax changes and the investment plans.

"It's a regimen where firms can come, take what they want and leave absolutely nothing behind for our country," she said.

Nicolás Lio, a 34-year-old medical representative, said he didn't agree with all of the bill, but that it was needed after years of economic crisis and rising inflation.

"It seems necessary to me. There are things that are not going to be great for us but they are things we have to roll up our sleeves and get done," he said.

"We have to adjust in some way and see the light at the end of the tunnel by the end of the year. As things were, it was impossible to continue."

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Published 28 June 2024, 10:00 IST

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