Devaluation, “anti-picketing” protocol and fare hikes: Javier Milei’s first measures

Javier Milei completed his first week in office. On the first and second days of his administration, the Central Bank (BCRA) decreed a “virtual foreign exchange holiday”, where foreign currency operations were limited, due to the fact that Economy Minister Luis Caputo had not yet announced the emergency economic measures. Changes and adjustments in the state structureOn the first day of government, Milei reduced parts of the state from 18 to 9 ministries, from 106 to 54 secretariats, and from 182 to 140 sub-secretariats, implying a 34% decrease in the different levels of officials. The concrete calculation of this decision represents 0.0014% of GDP, equivalent to an annual saving of $3.2 billion, according to the Center for Argentine Political Economy (CEPA). In addition, the suspension of all public works that have not begun to be executed was announced, which implies, on the one hand, lawsuits by companies against the State and on the other, a loss of 505 thousand direct and indirect jobs, which are those that were sustained from this investment of the state in the period 2023-23, according to the Ministry of Infrastructure’s projection. They also announced that state contracts that “have entered in the last year” will not be renewed; the suspension of national advertising for one year for the media and the minimization of discretionary transfers to the provinces. “There is no money for expenses,” was one of the arguments, especially in terms of advertising. And regarding the transfers to the provinces, Caputo, who was in charge of the economic announcements, said that “they are resources that, unfortunately, in our recent history have been used as a bargaining chip to exchange political favors.” After that decision, different provinces announced adjustments, including Tucumán, Catamarca, San Juan, Córdoba, Chaco, Entre Ríos, Chubut, Buenos Aires and Tierra del Fuego.Beyond the economic announcements of the structure of the State, Milei also took care of modifying Mauricio Macri’s decree to designate his sister Karina as secretary of the Presidency and modified a rule of the Constitution through a decree to appoint Rodolfo Barra at the head of the Attorney General’s Office, since by law he could not because he was over 70 years old. It should be noted that the former auditor of the government of Fernando de la Rua is about to turn 76 years old. On Tuesday, after the market closed, one of the economic measures that had the greatest impact on the population was the devaluation, which stood at 54% and was the third strongest in the history of our country. As a result, the official dollar stood at $800, which implied a rise of 118%. At the same time, subsidies to utility and transportation rates will be reduced. In that order, this Monday the government declared through a decree the “emergency” in the energy sector and ordered the start of the tariff review and establishes that the entry into force of the resulting tariff tables may not exceed December 31, 2024.On the other hand, they announced that the Empower Work program will be maintained “according to the 2023 Budget”, so he will suffer a freeze, although this month he will have a bonus of $10,000. It should be noted that bonuses are amounts that are charged only once. Likewise, the AUH will be doubled and the amount of the Alimentar Card will be increased by 50%. These measures are to mitigate the fall in income due to the devaluation. However, increases in the prices of food and the basket of basic necessities are around 20%, after the end of the Fair Prices program. In addition, withholdings for exports were increased, which will now have an aliquot of 15%, except for soybeans, which will pay 30%. This sector was finally left with a differential exchange rate, since 80% of its currencies are settled in the Single and Free Exchange Market (MULC) and the other 20% in Spot with Settlement (CCL), which gives an exchange rate of $860.One of the improvements that the sector celebrated was the completion of the SIRA system. which regulated the possibility of access to the official currency for importers, will be replaced by a “statistical and import information system that will not require the approval of licenses”. In this way, imports were freed. Security measures to “control” the streetsIn addition to the economic measures, as a way to control the streets and the complaints, the Minister of Security Patricia Bullrich announced an “anti-picketing” protocol, where the official highlighted the possibility that the four federal forces of thethe State and the Federal Penitentiary Service may intervene in cuts, pickets or blockades, partial or total. He also pointed out that the existence of alternative routes to traffic will not be taken into account, so the streets cannot be closed; Penalties will also be imposed on those who bring children to demonstrations; Immigration will be informed if there are foreigners on marches and the Nilda Garré protocol was repealed, which prohibited agents acting in a demonstration from carrying firearms and established that only rubber bullets could be used for defensive purposes. The government announced that it will try to reestablish the income tax and advance payments of personal assets, since it needs that collection and will seek to eliminate retirement mobility and make discretionary increases through a decree. On this last point, they assured that it is due to the fact that at this time the assets of the elderly will lose in the face of inflation that will be around 20% and 25%, so they seek to make an increase according to the variation in prices. A similar measure was taken by former President Alberto Fernández during his term, with the difference that at that time it was carried out through a decree of necessity and urgency due to the coronavirus pandemic. Later, the mobility law was modified and increases began to be made through the new calculation. In another order, the new administration will also promote an electoral reform to eliminate the Open, Simultaneous and Mandatory Primary Elections (PASO), which would enter with the reforms of the State and modernization of the Economy.In recent days, the Government of Javier Milei also borrowed USD 960 million with the CAF to be able to pay the IMF the maturities and it is expected that it will make a new agreement with the multilateral credit organization.

Original source in Spanish