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A new direction for the Argentine economy

A new government has recently taken office in Argentina. During the first 20 days of the new president there have already been severe changes: the president seeks to make a strong adjustment to stabilize the Argentine economy that has been glitzily damaged by the inflation of the last years. His team contains several government officials of former president Macri, such as Luis Caputo former and current Minister of Economy, and Federico Sturzenegger, former President of the Central Bank of the Republic of Argentina.

The resident, in his capacity as co-legislator, has issued a legislative act "decree of necessity and urgency" that proposes a deep reform of the state and of the economy. Interestingly, this act is only in force until the Parliament, in both Chambers, decides to reject it. The role of parliamentarians will be essential during the coming weeks, since certain modifications to the existing economic set-up can only be made by law approved by the Congress. In the meantime, the president sent a draft law that modifies around 300 laws, which serve as a legal framework for domestic and foreign trade markets. In addition, new proposals are expected to be discussed in the extraordinary period of the National Congress, which the current president has just convened.

The proposals essentially seek to deregulate all sectors of the Argentine economy. The primary and the mining sectors, public energy companies and other public utilities are expected to become private. Also, more flexible labour regulations, and a lightened regime for the importation of certain goods is foreseen through lowering taxes and simplifying the existing foreign currency payment system. These reforms are not without controversy. Argentine courts have already received more than 30 complaints from different players who see the new measures as detrimental to their businesses.

The new president seeks to continue with the roadmap drawn up with the EU regarding the joint work on the provision of critical raw materials (in line with the EU’s objective to create alternative streams for influx of rare earth materials for the European economy), as well as to make strong progress in the signing of the free trade agreement between the MERCOSUR countries and the EU, following the entry into office of the Brazilian president da Silva in April last year. The conclusion of the agreement is yet uncertain, though political sources referrer to a potential signing during 2024-2025.


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