More Bills & more – 28th Dec 2023

¡Buenos días from Greenway Parks! This is the Rorshok Argentina Update from the 28th of December twenty twenty-three A quick summary of what's going down in Argentina.

It’s been a little over a week since the president presented an emergency decree with 300 pieces of legislation, which means you may have had the time to read through its eighty-three pages. Well, don’t take your glasses off yet, because President Javier Milei has sent another eleven bills to Congress, this time covering taxation rules, which can’t be included in emergency decrees and have to be approved the traditional way.

To do so, he called for special sessions of Congress from the 26th of December to the 31st of January. The bills to be discussed include the reversal of the last income tax threshold increase and the introduction of the single paper ballot, which means voters would go from choosing the ballot of their preferred party to marking the candidate among a list of names in one ballot.

Additionally, Milei seeks approval for international agreements related to taxation and investments. For example, approving the agreements between Argentina and a variety of countries like Japan, Turkey, China, Luxembourg and more for the elimination of double taxation.

Even though going through Congress makes it a lot less controversial than an emergency decree, we can expect measures like the reversal of the income tax to spark a degree of social unrest. Last week was marked by cacerolazos, or pot-banging protests, both outside the Congress building and across various cities. On Thursday the 21st, demonstrators took to the streets to oppose the president’s plan, with some clashes occurring in the Córdoba province — where the police used tear gas to disperse street blockades and arrested five protesters.

Back to the topic of the emergency decree, the president sat down for a television interview with the network La Nación +, in which he defended the megadecree and said that if Congress rejects it, he will call for a plebiscite, or referendum. This is highly unusual in Argentina, but he also highlighted the non-binding nature of such a move.

During the interview, Milei advocated for a gradual approach to interest rates and outlined the urgent need for a package of measures focused on individual freedom, deregulation, and eliminating political inefficiencies. Additionally, he challenged provincial governors to make their own adjustments instead of asking the national government to provide them with the funds from taxes, such as the check tax, as they requested.

Also, he mentioned a phone call with Elon Musk, who expressed interest in the lithium issue, hinting that Starlink might enter the Argentine market due to internet deregulation.

A few days before the interview, the president and Minister of Security Patricia Bullrich sat down with the notable host and actress Mirtha Legrand on her show. They discussed the current state of the country, with Milei highlighting the lack of funds and a 15% GDP deficit. Still, he expressed optimism about their economic program, and Bullrich did the same with the security portfolio. They briefly acknowledged the intense criticism they directed at each other during the election campaign. However, they shifted the blame onto the former City Mayor, Horacio Rodriguez Larreta.

There’s also a plan to print larger peso bills. The Central Bank is considering the introduction of 20,000 and 50,000 peso notes, as a response to rising inflation and to reduce the inconvenience of dealing with numerous smaller bills for everyday transactions.

The current highest denomination, the 2,000 peso bill, is scarce, prompting reliance on 1,000 bills for daily expenses. The move aims to streamline transactions and minimize storage and logistical challenges associated with smaller bills. Plans for 5,000 and 10,000 bills were reportedly abandoned due to inflation concerns. The new banknotes are anticipated to be in circulation by March twenty twenty-four.

Speaking of banknotes, the president also emphasized the freedom to buy and sell US dollars on parallel markets or in cuevas without fear of persecution. The economic deregulation outlined in the emergency decree includes the legalization of operations in cuevas and transactions with street money-changers known as arbolitos.

Milei also addressed the need to lift Argentina’s strict currency controls, known as the cepo, but emphasized the importance of cleaning up the Central Bank and recovering excess money from the economy before fully removing foreign exchange restrictions.

On a related note, filmmaker Lautaro García Candela presented a new film that delves into the world of Argentina’s informal dollar market. Titled Cambio, cambio, or Exchange, exchange, the film explores the lives of the arbolitos who hustle dollars in Buenos Aires. It combines elements of a financial thriller and a love story, set against the backdrop of the city’s financial district. García Candela sheds light on the arbolitos’ conviction that they provide a public service, challenging conventional views and offering a nuanced portrayal of a unique aspect of Argentine culture.

The film is now showing in the MALBA museum.

In other news, we have updates on import restrictions. The Argentine government has ditched the previous import authorization system, SIRA, and introduced a simplified one called the Statistic Import System, SEDI. Luis Caputo, the Economy Minister, emphasized the goal of “normalizing” the import process and reducing the state bureaucracy’s power to decide on imports.

This move, effective from Wednesday the 27th of December, aims to simplify the import process and eliminate the need for automatic or non-automatic licenses for imports. CAME, the Argentine Confederation of Medium-Sized Companies, expressed support, noting that SEDI removes the complex paperwork and uncertainty associated with SIRA.

That said, the SEDI system will not eliminate import tariffs but will streamline the declaration and approval process. Declarations, made for statistical purposes, will undergo checks for customs risk analysis and efficient import assessment.

While the previous administration saw importers as harmful to the country’s economic interests, the current Economy Ministry argues that a significant portion of Argentina’s imports contributes to GDP growth.

Moving on to what’s going on inside the State, the government has cast a shadow over the holiday celebrations of approximately 7,000 state workers by issuing a decree confirming their dismissal. The decree mandates the termination of employment for public workers who were hired after the 1st of January twenty twenty-three.

The decision, part of President Milei’s pledge to target non-essential state employees, has drawn criticism from unionized state workers’ representatives, who expressed concern about the impact on families, accusing the government of promoting poverty and unemployment.

Also going through a tough time are YPF and Aerolíneas Argentinas employees. President Milei has initiated plans to privatize state-run Argentine companies, including the oil driller and the flagship carrier. Even though he faces potential opposition in Congress, where his party holds a minority, Milei outlined his intention to divest assets, including rail networks, state media companies, and the water and sewage company AySA.

All of these developments, added to the economic situation, are impacting countless families across the country. On Christmas Eve, more than 4,000 low-income individuals, workers, and those experiencing homelessness gathered for a communal dinner outside Congress, organized by various nonprofits. The “No Family Without Christmas” event featured donated food, emphasizing solidarity and community support.

The annual initiative, which began in twenty sixteen, provides a festive atmosphere with a children’s play area, including bouncy castles and Christmas presents, along with amenities such as showers and a hair salon.

To end on an uplifting note — literally — the Paris-based news website Worldcrunch recently featured an article about Anita B Queen, a rising Korean-Argentine DJ from Buenos Aires. In the article, she opens up about her personal journey, not only in discovering her love for music but also in embracing her true self and sexuality within a conservative community. If you’re interested, follow the link in the show notes!

Aaand that's it for this week!

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¡Nos vemos la próxima semana!