Argentina’s President-elect, Javier Milei, has recently reaffirmed his commitment to closing the country’s central bank, a campaign promise that he considers to be a “non-negotiable matter.” However, as he works to assemble his team before taking office on Dec. 10, there are indications that Milei is opting for a more moderate Cabinet than initially expected. This article analyzes the challenges Milei may face in implementing his radical reform plans and the potential impact of his policy agenda on the Argentine economy.
Contrary to his previous intention to appoint a close ally to lead the social security administration ANSES, Milei has selected economist Osvaldo Giordano, hailing from the central Cordoba region, to head the institution. This decision marks a shift in strategy and suggests that Milei might be opting for a more pragmatic approach to governance. Additionally, Horacio Marin, a private energy sector executive, has been confirmed as the incoming chief of state oil company YPF. These appointments indicate the president-elect’s attempt to form a well-rounded team, potentially accommodating a broader range of opinions.
Milei’s reform plans encompass several drastic measures, including dollarizing the economy, privatizing state companies like YPF, and, most significantly, shuttering the central bank. However, implementing these reforms will prove to be a formidable challenge. Firstly, Milei’s libertarian coalition lacks significant representation in Congress, reducing its ability to pass legislation and make sweeping changes. Moreover, the absence of provincial governors aligned with Milei’s ideology further limits his influence at the regional level.
While Milei’s campaign relied on the support of the more mainstream conservative bloc, he now faces the challenging task of reconciling their demands with the more radical policies championed by his libertarian coalition. The public backing of the conservative bloc played a pivotal role in Milei winning the run-off election, underscoring the importance of maintaining their support for successful governance. Balancing the desires of different factions will require strategic negotiation skills and compromises, potentially resulting in the dilution of some of Milei’s more radical proposals.
Milei’s reform agenda, if fully enacted, could have significant implications for the Argentine economy. The dollarization of the economy, while theoretically providing stability, may pose challenges in the short term as the country adjusts to the new monetary system. Privatizing state companies, such as YPF, could lead to increased efficiency and competitiveness. However, there is also a risk of overlooking potential negative consequences, such as job losses and reduced access to essential services. Additionally, the closure of the central bank could hinder the country’s ability to manage monetary policy effectively, potentially exacerbating economic volatility.
Argentina’s President-elect Javier Milei faces substantial hurdles in implementing his radical reform plans. While his recent appointments indicate a potential shift towards a more pragmatic approach, his coalition’s limited influence in Congress and the absence of supportive provincial governors present significant challenges. Furthermore, reconciling the demands of the conservative bloc and the libertarian coalition will require delicate negotiations and compromises. If Milei succeeds in pushing through his reforms, the Argentine economy could experience both positive and negative consequences. Only time will tell whether Milei’s vision for Argentina will be fully realized or tempered by the complexities of governing.