1706464021 Milei proposes a truce on his state abolition bill and

Milei proposes a truce on his state abolition bill and abandons his key tax reforms

Milei proposes a truce on his state abolition bill and

President Javier Milei has called for a ceasefire amid the war that has pitted him against provincial governors and much of Argentina's Congress in recent weeks. Late Friday, the government announced it would scrap major tax reforms proposed in its mega-government abolition bill. Miley hopes the measure will satisfy what she calls the “reasonable opposition,” which in a matter of days went from endorsing – with many reservations – the opinion of the norm for her vote in Parliament to condemning her to death. After a very long week in which the president faced his first general strike by the unions and fired one of his ministers on charges of leaking information to the press, Milei is preparing for another general strike. The Argentine government is convinced that it can now pass its so-called omnibus law.

The law – which includes more than 500 articles and with which Milei seeks to gain emergency legislative powers – failed this Friday after almost a month of negotiations. Reforming the system that measures pension increases and increases in taxes on regional exports ultimately left the government facing a majority of congressmen from the center to the right and the governors whom Milei hoped to persuade.

Since mid-January, the government has stated that it has not negotiated the content of this law, which aims to change much of the country's political, economic and social structure. But he gave in to the loneliness of his minority in Congress. Milei is no longer seeking up to four years of special powers that allow him to rule by decree. Now he is only asking for two years and has backed down on other issues. The president accepted the “mistakes” in the drafting of the security chapter, in which an article proposed the control of public gatherings of more than three people and removed the oil company YPF from the list of 41 state-owned companies that he wants to privatize. He also reversed the definition of the National Film Institute or the closure of the National Arts Fund, which administers grants for artists and whose intended closure has called on cultural workers to protest on the streets of Buenos Aires.

Milei had also abandoned his intention to change the pension formula by decree in order to maintain the quarterly increase program planned for March, which will arrive late with inflation that only exceeded 25% in December. The proposal did not satisfy opponents negotiating with the government: the PRO of former conservative President Mauricio Macri, the center-right Radical Civic Union and a broad bloc of federal Peronists and other minority forces who also do not accept the formula. Likewise, the government had agreed to reverse the withholding of up to 15% on exports from agricultural producers in provinces far from Buenos Aires, but intended to maintain increases of up to 33% for products such as flour, oil, corn, etc. Fishing, eventually angered the governors.

The announcement that these two measures will be removed from the law, along with others such as the relaxation of money laundering or the waiver of late payment interest, came as the country speculates about the dismissal of Guillermo Ferraro, one of the architects of Milei's victory in the second round of elections in November, who was appointed minister of infrastructure, a mega-portfolio that included public works, energy, transport, mining, telecommunications and housing.

According to the reconstructions of the local press, Ferraro had leaked to the newspaper Clarín a tantrum from Milei against the governors, who were tightening the negotiation line. “I will leave them destitute, I will melt them all down,” the president reportedly said in a Cabinet meeting this week as he raced against time to persuade the “reasonable opposition” to vote on the bill.

The threat was not the first the government made publicly. Both the presidential spokesman, Manuel Adorni, and the economy minister, Luis Caputo, have been warning the rest of the political circles for weeks that the fiscal adjustment will continue to be at the expense of the population if the law is not passed. “If any of the economic articles are rejected, there will be provincial articles that will be cut immediately,” Caputo threatened on Wednesday, but two days later he was responsible for announcing at a press conference that he would ultimately eliminate the articles in the dispute. “This does not mean at all that we will abandon our commitment to achieving fiscal balance and our goal of zero deficit. What we do not want is for something that we consider necessary and urgent to be delayed by this budget chapter. The eyes of the world are on this change,” said the Economics Minister.

After the government ended 2023 with a budget deficit of 3%, the question now is how it will achieve its goal of bringing the budget deficit to zero or even end 2024 with a surplus, as promised to the International Monetary Fund . The IMF has reopened the valve so that Argentina will receive foreign exchange to pay off its debts to the organization as long as Argentina maintains fiscal adjustment. This week Milei returns to the scrutiny table: the fund's board will meet next Wednesday to decide whether to release the funds Argentina needs to breathe debt-free by April. The passage of the law, which the government said will be discussed in the lower house of Congress on Tuesday, will be crucial.

Interior Minister Guillermo Francos explained this Saturday that there are “already agreements” to approve the extraordinary powers of Milei and that he hopes that the project will be sent “quickly” to the Senate. “The President and Caputo have decided to withdraw the fiscal part and, in the meantime, to move forward with the law in the part on which we agree,” explained Francos.

Peronism warns of “traps”

Milei has backtracked on points demanded by the opposition with whom he is in dialogue, but he will not accept that he will not be given emergency legislative powers. The law provides for the declaration of a public emergency for one year – with an extension for an additional year – so that the executive branch has, among other things, legislative powers on economic issues. “All presidents have had extraordinary powers. “Everyone had this opportunity,” said the Interior Minister this Saturday, explaining that the government had the votes to pass its law.

For Peronism, which has the first majority in Congress and has refused to take part in the negotiations, Friday's announcement is a trap. “Milei only wants superpowers (delegated powers). It is the heart of the law,” wrote the leader of the Peronist deputies, Germán Martínez, in his networks. The consensus that Milei has remains to be seen. On Tuesday, MPs will meet and regardless of whether the bill is approved in the Senate or not, the session will be historic, with more than 500 articles discussing one after another the future of a country in crisis and no others Proposals as a leap into the crisis the unknown.

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