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ECONOMY | 14-03-2024 21:18

Milei’s bold decree suffers major setback after repeal in Senate

President's initial dose of shock therapy teeters on the edge of collapse after Senate defeats his sweeping executive decree.

President Javier Milei’s initial dose of shock therapy teeters on the edge of collapse after Argentina’s Senate defeated his sweeping executive decree in a 42-to-25 vote Thursday.

The decree now goes to the lower house of Congress where a simply majority can scrap the more than 300 measures aimed at deregulating Argentina’s economy, which have been in place since late December.

Push-back against his initiative comes after he failed to secure enough votes for his much larger omnibus reform package in February, stoking investor concern about his legislative strategy to revive the crisis-prone economy hurtling into recession and 270 percent inflation. 

Milei earlier Thursday circulated a new, trimmed-down draft of his 'omnibus bill' among governors and some lawmakers that excludes the privatization of oil company YPF SA, declares some emergency powers and proposes a new formula for calculating pension payments, among other changes. The move illustrates Milei’s revised negotiating tactic, seeking to build support among Argentina’s governors before trying to rush it through Congress.

Opposition lawmakers from the Peronist party had been applying pressure on Vice-President Victoria Villarruel to hold a special session to vote down the decree since January, while a handful of moderate lawmakers signed onto the petition last month.

Resistance to continued calls to a vote became impossible after regular sessions kicked off this month, according to a person familiar with Villarruel’s decision.

The president’s press office fired off an angry statement on social media Wednesday night condemning the “hurried treatment” of the decree and expressing “concern over the unilateral decision by some sectors of the political class.” In a press conference Thursday morning, spokesman Manuel Adorni denied multiple press reports of friction between Milei and Villarruel.

Milei’s party holds just seven seats in the 72-member upper chamber and about 15 percent of representatives in the lower house. The decree deregulated various aspects of Argentina’s economy, including steps to privatise companies, facilitate exports and end rent control. An important part of the decree had already been suspended after an Argentine court in January deemed its labor reforms unconstitutional.

by Manuela Tobias, Bloomberg

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