AFP28 June 2024 | 8:50

Argentina parliament approves President Milei's pro-business reform package

President Javier Milei had begun congratulating himself even before the package was adopted, hailing it as "the greatest fiscal adjustment not only in Argentina history, but in the history of humanity".

Argentina parliament approves President Milei's pro-business reform package

Lawmakers react after approving the "Bases Law" in the Chamber of Deputies of the National Congress in Buenos Aires, early on June 28, 2024. Picture: Emiliano Lasalvia / AFP

BUENOS AIRES - Argentina's parliament handed populist President Javier Milei his first legislative triumph on Friday, approving his business-friendly economic reform package after months of debate.

After an hours-long debate the chamber of deputies approved the bill as well as a tax reform package, which includes the reinstatement of income tax on salaries.

Milei's party is in the minority in both houses of Congress, which he has described as a "nest of rats," making legislative approval a major hurdle for his government.

His office said it "celebrates" the approval of the bill.

Milei had begun congratulating himself even before the package was adopted, hailing it as "the greatest fiscal adjustment not only in Argentina history, but in the history of humanity".

The self-declared "anarcho-capitalist" president now has the green light to declare a one-year state of economic emergency, disband federal agencies, and privatise about a dozen public companies.

Other measures deal with weakening labor protections - slammed by left-wing opponents as a license to fire workers.

The provisions also envision tax, customs and foreign exchange incentives to encourage investment in the country wracked by economic crisis.

Preliminary approval for the bill earlier this month was marred by protests that saw police use rubber bullets and pepper spray against the rioters, who responded by lobbing stones at officers.

The bill was approved by 148 votes to 107 for the amended reform package.

"We are going to give President Milei's government the tools to reform the state once and for all," ruling bloc head Gabriel Bornoroni said in his closing speech early Friday.

'SUCCESS'

Milei's government has applied a drastic, all-out fiscal austerity program, with the aim of achieving "zero budget deficit" by the end of 2024 to tame chronic inflation.

But budget cuts, including the paralysis of public works, coupled with a brutal devaluation of the peso by more than half in December, have strangled purchasing power.

Politically, Friday's green light means "a total success for the government", political scientist and economist Pablo Tigani told AFP.

But in the economic sphere, "it will be a return to the policies of the 1990s, with deregulation, privatization and the unconditional opening up of the economy, which will deal a heavy blow to industry and to national small and medium-sized enterprises."

The whittled-down bill has 238 articles - slimmed from an initial 600-plus.

To achieve approval, the government removed flag carrier Aerolineas Argentinas, the Argentina post office, and Radio y Television Argentina (RTA), which controls public TV and national radio, from the list of companies to be privatised.

The government also dropped a pension reform that would have eliminated a moratorium benefitting people who cannot prove 30 years of contribution upon reaching retirement age, vital in a country where nearly half the workforce is in the informal sector.