Argentina Hits Pause on Key Privatizations Amid Crucial Economic Reforms

In a high-stakes move, Argentina’s government shelved plans to privatize its national airline and postal service.

This decision aims to secure Senate approval for President Javier Milei’s ambitious Basic Law, designed to liberalize the economy.

Six months into his term, Milei has struggled to pass significant legislation.

Wednesday’s pivot seeks to increase the bill’s appeal, with the Senate starkly divided—36 in favor, 36 against.

If tied, Vice President Victoria Villaruel holds the decisive vote. Tensions ran high as strikes and protests encircled a heavily fortified Congress.

“We’ve sacrificed much to set the stage for progress,” Senator Bartolomé Abdala claimed, defending the initiative.

Debate started in the morning and might continue until dawn. If approved, the law, already passed by the House in April, would go back for final ratification.

Initially, the Basic Law comprised over 600 articles granting extensive powers to the executive.

However, a February rejection forced the government to trim the bill significantly. Milei’s frustration boiled over during debates, openly insulting Congress.

Despite holding only seven of 72 Senate seats, Milei’s camp has nearly secured the 37 votes needed, thanks to right-wing support.

Rejection means a year’s delay before reintroduction, further eroding Milei’s shaky political foundation.

Argentina Hits Pause on Key Privatizations Amid Crucial Economic Reforms

Meanwhile, the Ministry of Human Capital is scrutinized after failing to distribute 5,000 tons of stockpiled food.

A proposed tax reform, reintroducing taxes on wages and pensions, is also on the table.

This drama unfolds against a backdrop of economic turmoil, with industrial collapse, rampant layoffs, and persistent 300% inflation eroding pensions and wages.

Half of Argentina’s population now lives in poverty.

Milei lamented the drawn-out debate, stating, “Politics shows little concern for easing adjustments,” before departing for a G7 summit.

The ruling party’s legislative journey is fraught, facing opposition in both chambers.

Political scientist Iván Schuliaquer noted, “Milei’s credibility hinges on Congressional action and functional governance,” echoing sentiments from the IMF to foreign investors.

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