Argentina’s President Javier Milei on Friday summoned provincial governors and other political leaders to sign a “foundational pact” that outlines an extensive libertarian reform agenda for the country.
Mr. Milei told lawmakers on March 1 that the agreement, known as the “May 25th Pact,” will be centered on 10 principles. These include a “non-negotiable fiscal balance” and tax reform that promotes trade.
The principles also include the inviolability of private property, reducing public spending to around 25 percent of the GDP, and implementing labor reform, pension reform, and structural political reform.
The pact also calls for Argentina to open up to international trade and to revisit the federal tax-sharing agreement in order to permanently end the country’s current “extortive model.”
Mr. Milei said that he would push through the sweeping economic reforms regardless of approval from political leaders, the Buenos Aires Times reported.
“Our convictions are unalterable. We are going to change the country for good ... with or without the support of political leaders, with all the legal resources of the executive,” he said.
The libertarian leader also warned governors that refusing to sign the pact may cause conflict.
“If you look for conflict, you will have conflict,” Mr. Milei said. “When we come up against an obstacle, we will not turn back, we will continue to accelerate.”
Mr. Milei said that “it will be some time” before the country can see the results of the economic reorganization and the reforms he intended to pursue.
“We have not yet seen all the effects of the disaster we inherited, but we are convinced that we are on the right path because, for the first time in history, we are attacking the problem by its cause: the fiscal deficit, and not by its symptoms,” he added.
Mr. Milei, who was sworn into office in December, has pledged to reverse the crisis in Argentina, where inflation is at 250 percent and a reported 57 percent of people live in poverty, with tough measures.
‘Tough Transition’
U.S. Treasury Secretary Janet Yellen told reporters in Brazil last week that Argentina will have a “tough transition” as the new government works to bring fiscal policy under control.Ms. Yellen made the remarks after meeting with Argentine Economy Minister Luis Caputo on the sidelines of a Group of 20 nations summit in Brazil on Feb. 29.
“They inherited an impossibly difficult situation, and I think the steps that they have announced that they are willing to take are very promising,” she told Reuters.
Ms. Yellen also said that Argentina is in talks with the International Monetary Fund (IMF) about a possible financing program but did not elaborate.
“They are potentially talking about a new program and setting different targets. They’re working with the IMF and are going to continue to do so,” she said.
Meanwhile, Bloomberg reported on Feb. 29 that Mr. Milei is working to accelerate a fresh injection of cash to hasten the abolition of the country’s capital controls.
In exchange for the program, the IMF is urging Argentina to allow the peso’s exchange rate to devalue faster and to maintain interest rates above the inflation rate, which rose to 250 percent last month.
The IMF called Argentina’s stabilization efforts “bold” and “far more ambitious” than measures taken by Mr. Milei’s predecessors.
“The authorities’ strong ownership and electoral mandate to eliminate fiscal deficits and long-standing impediments to growth (many benefiting vested interests) mitigate implementation risks,” the IMF said in a Jan. 29 paper.
