Argentinians gather in front of the National Congress of Argentina on February 6 in Buenos Aires, Argentina, to celebrate that the ruling party could not continue the debate on the “Omnibus Law” because they lost votes on every article of its general content , 2024.
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Argentina’s President Javier Milei accused governors of wanting to “destroy” his sweeping economic reform law, shortly after his ruling party abruptly withdrew the package from the country’s lower house.
The so-called “omnibus” bill, which received general support from opposition MPs last week, was rejected on Tuesday in an article-by-article approval process.
The package of measures is a central tenet of Milei’s efforts to reform Latin America’s third-largest economy. The bill aims, among other things, to privatize state facilities, increase penalties for social protests and restrict some environmental protection measures.
Milei’s Libertad Avanza party has pledged to send the bill back to committees for debate if governors “realize that it is the people who need it, not the government.”
In an official statement on the social media platform.
The libertarian leader, who won a presidential runoff late last year, said there was no alternative to his proposed “shock therapy” if the government wanted to get to grips with Argentina’s deep economic crisis.
Argentines’ purchasing power has been damaged by an annual inflation rate of more than 211%, the highest in 32 years, while two in five citizens now live in poverty after decades of financial mismanagement.
“The defeat of Milei’s omnibus bill in the House of Commons plenary debate speaks volumes about the government’s political ‘inexperience’ and is the result of an attempt to push through all reforms in a single mega-bill,” said Jimena Blanco, head of risk advisory for the Americas at Verisk Maplecroft CNBC via email.
Javier Milei, Argentina’s President, during a visit to the Yad Vashem Holocaust Memorial Center in Jerusalem, Israel, on Wednesday, February 7, 2024.
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Blanco said a key mistake was the government’s assumption that the majority of votes it received in November’s election would be enough to force the “caste,” as Milei called the political establishment, to approve the bill to agree, or subject oneself to an opinion penalty.
“The reform bill is now back to square one, but with the complicating factor that the initial willingness of certain opposition blocs to negotiate and cooperate with the executive has waned, and some are downright angered by what they see as legislative amateurism,” says she added.
‘Plan B’
JPMorgan economist Diego Pereira said Tuesday that the lack of congressional support for the bill suggests that the Milei government should rethink its policy strategy and “enter a more difficult period that could lead to increased volatility.”
“This is an unprecedented event and there is no memory of a government rejecting its first draft law,” Pereira said in a research note. He added that a “Plan B” may now be in sight as Milei has promised to continue his reform program.
“Against this background, the possibility of President Milei calling for a non-binding referendum becomes more likely. “It is noteworthy that during the election campaign, Milei referred to the possibility of calling for a non-binding referendum should there be a deadlock in Congress,” Pereira said.
Milei, who is often compared to former US President Donald Trump, is currently in Israel on his first bilateral trip abroad.
—CNBC’s Michael Bloom contributed to this report.
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2024-02-07 13:56:32
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