Javier Milei, President of Argentina, announced a “monetary regime change” aimed at economic stability.
Celebrating the Ley de Bases’ approval and a fiscal package, Milei introduced a new phase of governance. “We are moving towards zero emissions,” he declared, signaling significant reforms.
The Ley de Bases ends the first phase of Milei‘s administration. This reform package is five times larger than former President Menem’s reforms.
With the DNU (Decree of Necessity and Urgency) in effect, Argentina has launched 800 structural reforms. These reforms aim to improve Argentina’s economic freedom by 90 places.
Milei aims to position Argentina like Germany, France, and Italy, potentially quadrupling per capita GDP.
Milei’s government achieved a zero deficit and is now focusing on zero monetary emissions. “We have closed the fiscal tap,” he stated.
The administration reduced remunerated liabilities from 10% of GDP to 1%, a 9-point adjustment.
The broad monetary base now stands at 7-8% of GDP. Historically, the simple monetary base was 9–10%; now it is 2.8% of GDP.
Economic Reforms Under Milei’s Administration
The economy has rebounded, leading to increased money demand. The simple monetary base is expanding due to higher currency circulation.
Lower inflation and nominal interest rates make people hold more cash. This restructuring aligns the simple monetary base with the broad monetary base, eliminating remunerated liabilities.
Federico Sturzenegger, former BCRA President, will join Milei’s cabinet to oversee structural reforms. His ministry will enhance economic freedom and growth.
In addition, the administration will introduce the “Ley de Hojarascas,” eliminating 100 obstructive regulations.
The Ley de Bases’ approval will reduce the PAIS tax from 17.5% to 7.5%. This reduction will not be immediate.
Implementation follows law, regulation, and revenue collection. Milei expects this to happen in August, once the framework is ready.
Milei’s plan for Argentina’s economic reform aims for stability and growth. By addressing fiscal and monetary challenges, the administration seeks to position Argentina among the leading economies.
In short, the focus on structural reforms, fiscal consolidation, and tax reduction represents a comprehensive approach to recovery and prosperity.