Sometimes men’s optimism Javier Millay It makes you feel euphoric. This is something that even officials who are used to evaluating every word they say are aware of it. Luis “Toto” Caputo. The Minister of Economy expressed this sentiment in a speech a few days ago. FIEL Annual Conference. He cited an “unprecedented situation” in which for the first time there is strong support from Argentine society for political decisions to maintain macroeconomic order and fiscal balance. In other words, the government is trying to force an interpretation of recent electoral successes. Just when many thought the public could not support the adjustment, opinion polls showed the opposite.
A government spokesperson claims that Mr. Millei’s Argentina is trending around the world and that the country has received renewed interest from diplomats and foreign companies in various areas of government administration after the October 26 election. In this sense, the Minister of Finance emphasized the following: Incentive system for large-scale investments (Rigi) Nine projects have been approved for about $24.8 billion and 15 are under evaluation for about $26.5 billion, but it goes even further and predicts that by 2031, mining alone stands to generate a surplus balance of $57 billion.
The main risk that investors feared before the mid-term parliamentary elections was not the so-called “kuka risk” but rather the risk arising from the perception that society would no longer support the government’s economic transformation process. The bottom line from the poll results is that patients are tolerating Dr. Millay’s treatment.
May be interpreted according to the government’s wishes Argentine society supports adjustment.. However, many questions remain. If Argentina reaches a tense situation requiring assistance, donald trump And the US Treasury stopped the exchange rate from rising precisely because the economic authorities were unable to increase foreign exchange reserves. central bankviolate any of the promises made. international monetary fund. But it’s also true that a majority of voters didn’t care that Milley had to rely on North Korea’s power to relieve pressure on the dollar. He was only concerned about results that made him feel safe.
Many voters preferred to remain doubtful about where Millais was leading them rather than to be confident about the hypothesis of where a Kirchnerist return to power would lead them.
In a post-election survey conducted by a consulting firm, Synopsiswho is the director Lucas Romerothe people were asked Why did they vote for La Libertad Avanza?. It was concluded that 28 of the 40 points the coalition received were explained by sympathy for Millais. Seven points are related to support for the economic direction despite things they don’t like about the president, and five to six points are related to the denial of the possibility of a Peronist victory and concerns that it will cause an economic crisis. This last segment contains the so-called centrifugal voting, which explains the poor electoral performance of the following groups: unified statesome local forces or ricardo lopez murphy In the city of Buenos Aires. Should Mileistas be happy about their election victory when the fear caused by the possibility of a return to Kirchnerism is a big part of the outcome?
There are other data that cast doubt on voters’ political satisfaction with Millais’ government. According to a study by UNICEF, In more than 56% of Argentine households, their boss declares that they are worried about the possibility of losing their job.. Another survey developed by a consulting firm Empyriasupervised by a former economy minister Hernan Lacunzadetails that today’s employment levels are significantly lower than the 2023 average in three of the major sectors of economic activity. The construction industry has seen a 15% reduction in workers. 12% decrease in industrial, 7% decrease in commercial.
investigation of Jorge Giacobbeconcluded among 2,500 citizens on November 2nd, when faced with questions about the limits of suffering Argentines can endure, pointing out: 38.5% agreed that it was “worth the effort and we should keep moving forward.”. A yellow light is on for 10.6% who think it’s worth the effort, but people won’t put in the extra effort. On the other hand, 48% said that the government causes people to suffer needlessly.
Many voters preferred to remain in doubt about where Millais would take them rather than be certain of where they would go if Kirchnerism were to return to power.
In short, while the proportion of the population that seems willing to tolerate adjustments so far is not small, that level of tolerance will not last forever. The government has warned of this and is rushing to make investments that can rebuild a virtuous cycle that fosters hopes for greater job security and higher incomes.
trade and investment framework agreement with united states of america It can be operated in that sense. It is true that certain inaccuracies leave doubts about its scope and depth, but as some critics have pointed out, it is Argentina that appears to have undertaken the most commitments in principle. For now, it is more of a catalog of demands from the United States to Argentina than an understanding based on mutual concessions. On the other hand, it should be noted that the United States is the world’s largest importer and largest foreign investor, with North American companies investing $10 billion from abroad. In this sense, the agreement could improve the competitiveness of Argentina’s export sector and position the country as a more attractive destination for new investments in strategic economic areas.
Uruguayan economist and former foreign minister passes through Buenos Aires Ernesto Talvi He provided an interesting overview at the FIEL conference and spoke about the striking similarities between programs faced with economic crises. Uruguay In the 90s and Millay’s Argentina. He pointed out that in 1990, Uruguay had an inflation rate of 130%, a budget deficit of 7% of GDP, a lack of foreign exchange reserves, no access to international credit, a stagnant economy, and increasing dollarization. It was a very similar situation to the one Millais faced in December 2023. Equally striking to Talvi was the conceptual similarity to the stabilization plan developed by Uruguay in 1990 during the Uruguayan presidency. Luis Alberto Lacalle de Herreraand what Millais released. Both countries have in common: fiscal adjustment, a floating exchange rate band as an anchor, contractionary monetary policy, the intention to accumulate foreign exchange reserves, structural reforms, injection of international liquidity, and an agreement with the Japan-U.S. alliance. IMF. The only differences were that Uruguay restructured its debt, unlike the current Argentine government, and unlike its neighbors, Argentina received support from the US Treasury.
What is interesting about Uruguay’s case is that eight years after the stabilization plan was implemented, inflation was only able to fall to single digits. We succeeded in reducing the rate from triple digits to 40% in one and a half years, but it took five and a half years to reduce it to below 10%. Only after seven and a half years of the program, Uruguay investment gradeOne year has passed since the social security system reform. Only then did the system of exchange bands expand, although full liberalization of the exchange market had to wait until 2002. That’s good news for “Toto” Caputo. Asked recently about the possibility of a move to a free-floating dollar, he replied: “We Argentines are obsessed with the fear of running faster than our legs.”.
Today, Uruguayans’ GDP per capita is on average 50% higher than that of Argentines around 1980, when both countries had similar GDPs.
Talvi’s first conclusion was that for a stabilization plan to be successful, Strategic patience and national policy. The latter probably represents the most relevant data for Uruguay. In Uruguay, the same program was continued by two presidents of different political backgrounds. Between 1990 and 1995, Mr. Lacaré of the Blanco Party, Julio Maria Sanguinettimember of the Colorado Party from 1995 to 2000.
The roadmap envisaged by the Milley administration would begin with the approval of the 2026 Budget Act after Congress renews Dec. 10, and possibly the start of labor reform treatment in committee. Under his ideal plan, he would continue to impose sanctions on the Code and the Presumption of Innocence bill, scheduled for February, at the same time as starting a discussion on tax reform. Although the government denies the possibility of abolishing the monotax, it does not exclude the possibility of a change in the system, but it has been made clear that the purpose is to remove the weight of the state from the people, with the purpose of expanding income deductions to include transportation costs and home repair costs, as well as the deduction limits for mortgage interest payments (today reaching a whopping 20,000 pesos per year) and life insurance and savings payments.
The details of the structural reforms proposed by the government are not yet known, but the ruling party will have an advantage in this debate if some of the ideas proposed by Kirchnerism’s referents on tax issues are accepted. Maximo Kirchner He proposed raising personal property taxes again to the same level as when the government was in power. Alberto Fernandez; Emmanuel Alvarez Aguis He proposed introducing a tax on cash (“When you go to an ATM, they give you 900 pesos for every 1,000 pesos you want to withdraw,” he said.) Other alternatives being considered by Kirchnerism range from inheritance taxes to higher withholding taxes on local exports.
Peronism falls prey to a programmatic trap, because it cannot recognize the need for fiscal balance without examining Millais’ plan, and a reputational trap, because many of its leaders cannot vocally support the urgency of deportation. Christina Kirchner About driving. Meanwhile, the former president continued to do his job after being placed under house arrest. She posted tough questions for the court that is trying her in a major case. damaged notes. He described the trial as an “operetta”, adding that “there was pressure, blackmail and even… The accused was tortured to make him repent.”. Another sign that Kirchnerism has only a tragic past ahead of it..
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