Argentina’s president-elect, Javier Milei, has announced his plans to initiate a wave of privatizations in the country’s economy. Milei, a right-wing populist and libertarian economist, won the presidential runoff election with 55.7% of the vote. He intends to start by privatizing state-owned media outlets and eventually extend the privatization to other public companies. Milei stated that his goal is to transfer everything that can be in the hands of the private sector to the private sector.
However, experts have raised doubts about Milei’s ability to achieve this vision without the support of Argentina’s National Congress, where his party holds a relatively small number of seats. Nonetheless, some analysts believe that his decisive election victory could give him leverage in influencing the transition and the formation of the Cabinet.
In his radio remarks, Milei described the state-owned media outlets as a “covert ministry of propaganda” and criticized the negative coverage of his campaign in these outlets. He also expressed his intention to implement some of his controversial ideas, such as reducing the number of government ministries by half and tackling Argentina’s triple-digit inflation.
Although Milei still aims to close the Central Bank of Argentina, he has put his plans to replace the local currency, the peso, with the U.S. dollar on hold. He stated that the primary focus is to close the Central Bank, and the choice of currency will be determined by the Argentine people.
Milei estimated that it would take him around 18 to 24 months to address the issue of inflation, which is a major concern for Argentine voters as consumer prices have risen by 140% over the past year. He aims to achieve this by reducing the size of the government and eliminating taxes, as highlighted by Diana Mondino, a lawmaker from Milei’s party.
One of the entities Milei believes should be privatized is the state-controlled energy firm YPF. However, he emphasized the need to stabilize its finances before proceeding with privatization to ensure a beneficial outcome for Argentines. Milei claimed that YPF’s balance sheet suffered after a majority stake was nationalized during the previous government led by Cristina Fernández de Kirchner.
Milei’s privatization plans may face legal challenges as they clash with Argentina’s constitutional model, according to Andrés Gil Domínguez, a law professor. Any such moves would require authorization through legislation passed by Congress. However, Milei’s party currently has a limited number of seats in Congress, making it difficult to impose his policies without forming alliances with other parties.
In the absence of congressional support, Milei could potentially resort to emergency decrees to privatize companies. However, such actions could be contested by Congress on the basis that they do not constitute actual emergencies. The outcome of any legal disputes in this scenario remains uncertain.
Another potential avenue for Milei to pursue privatization is through gradual or abrupt defunding of state-owned enterprises, heavily constraining their operations. However, privatizing YPF would be more complicated due to the divided ownership between the federal government and Argentine provinces.
Milei’s election victory has generated anticipation in the financial markets, with Argentine companies trading in New York experiencing a surge in stock prices. The impact on the parallel currency markets, considering the devaluation of the peso following Milei’s strong performance in the August primaries, remains to be seen.
Overall, Milei’s plans for privatization face various challenges, including limited support in Congress and potential legal obstacles. While his resounding election victory gives him some leverage, the implementation of his vision will require navigating complex political and legal landscapes.