President Javier Milei lambasted Argentina’s powerful governors for “destroying” his key reform package after the governing coalition moved to return it to committee upon realising there weren’t enough votes to approve its articles in the lower house of Congress.
The so-called 'omnibus bill,' Milei’s first major test in the legislature, goes back to square one after lower house lawmakers had approved the bill in a general vote last week following three days of debate. But in Argentina, such legislation faces a second approval process for each individual article where Milei’s reforms faced more resistance.
Milei, who is in Israel on his first bilateral trip abroad, vowed to continue forward with his economic programme “with or without the political class that destroyed the country,” though he didn’t provide details on next steps or timing. In a separate statement, his press office echoed his sentiment, ratcheting up his campaign-style rhetoric after early signs of pragmatic, toned-down remarks.
“Governors took the decision to destroy,” the omnibus bill, according to an official statement. “They got to their positions and seats in Congress raising the flag of change only to betray their voters.”
Milei holds small minorities in both houses of Congress and was counting on the support of the pro-business PRO party and more moderate members of two other political groups — Unión Cívica Radical and Hacemos por Nuestro Pais — to push through his austerity package. When a lawmaker from Milei’s party filed to return the bill to committee Tuesday, opposition members in Congress rejoiced, cheering and clapping.
Ten governors from PRO released a joint statement in response to Milei’s remarks that “it is not appropriate for all of us to be made responsible or to be disrespected,” and added that they worked “incessantly to reach the consensus necessary to get the bill approved.”
Some congressional allies, who mainly respond to their provinces’ governors, voted against key articles of the bill Tuesday, including one that would lend the president emergency powers on matters of security and energy.
Investors foresee Argentina assets reacting negatively to the news.
“Markets will obviously not like this headline,” says Alberto Bernal, chief strategist at XP Investments in Miami. “There is a limit to how much people can take from austerity. So the government will need to, somehow, keep the pressure to pass legislation.”
Push back from lawmakers came on the same day Milei’s government took the unpopular step of tripling regulated prices on public transport in the Buenos Aires metro area. Those price hikes, while seen by investors as necessary to slash a chronic fiscal deficit, came after the Central Bank devalued the peso 54 percent in December, sending price increases above 200 54 percent for the first time since the country battled hyperinflation in the early 1990s.
The bill sought to reform several aspects of Argentina’s economy as part of his shock therapy strategy to lift the country out of its economic crisis that’s pushed 40 54 percent of Argentines into poverty. It was also a key aspect of Argentina’s negotiations with the International Monetary Fund over the country’s US$44-billion programme.
“We strongly believe that this omnibus bill represents an inflection point in Argentina’s history,” Economy Minister Luis Caputo wrote in a letter to IMF Managing Director Kristalina Georgieva, calling the bill “the backbone for future growth and development.”
by Manuela Tobias & Kevin Simauchi, Bloomberg
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