Seven days passed since the runoff, but in Argentina they were experienced as a longer period. Javier Milei, the president-elect, conducted several interviews in the media where he anticipated that he is preparing an economic shock planwhich includes a strong fiscal adjustment, privatization of public media, layoffs of state workers for the elimination of ministries and a “market solution” for the Leliqs problem. “Everything that can be privatized, we are going to privatize,” Milei confirmed on LN+. It is a program with a 90s flavor, it is no coincidence when the idols of the president-elect are Menem and Cavallo, a plan that ended with great unemployment and poverty.
Milei’s plan has several contradictions and weaknesses, such as not having its own governors or mayors, nor its own majorities in Congress and having almost half of the country that voted against it.
During this week it was learned that Luis Caputo He would be Milei’s Minister of Economy, the “Messi of finance” and one of those responsible for the debt during the Macri administration, he would once again join the economic cabinet although it has not yet been officially confirmed. Meanwhile, Emilio Ocampo, the guru of dollarization, was left out of the Central Bank, which can be interpreted as a postponement of the dollarization plan for a next stage. His place would be occupied by Demian Reidel, Federico Sturzenegger’s man, who served as second vice president of the Central Bank during the Macri administration between 2015 and 2018. But this weekend Reidel took a step aside and wrote on He is going to “serve as president of the BCRA.” He is looking for president for the Central. Not only in the economic cabinet were there changes but also in the rest of the boxes to occupy State positions, which may be an expression of the negotiations and tugs between La Libertad Avanza and Macrismo for spaces of power.
Adjust the background
“I’m going to do a shock adjustment. 2024 has to end with fiscal balance,” said Milei in an interview with Alejandro Fantino. The president-elect blackmails that not adjusting would imply hyperinflation, or falling into the “worst crisis in history”. He also added that “between the fiscal and the quasi-fiscal we are going to make an adjustment of 15 points of GDP.” Within those 15 points, according to the economist’s statements, it is interpreted that they would make an adjustment to the primary fiscal deficit of 5% of GDP and 10% of GDP corresponds to the Central debt that includes the Leliqs.
Milei promises that the “adjustment will be paid for by politics, not by good people,” but if you analyze what items he could cut, The adjustment will fall on the workers and the popular sectors. The Economist Juan Manuel Telechea He detailed in his newsletter published in Cenital how much Milei should cut to reach a zero deficit next year. Thus the scissors would pass through: management positions in the State (0.3% of GDP), operating deficit of public companies (0.3% of GDP), subsidies for energy and transportation (2% of GDP), transfers to the provinces (0.7% of GDP) and public investment (1.7% of GDP). Las consequences from this cut would be: sharp rise in the rates of public services (electricity, gas, public transportation) due to the elimination of subsidies, layoffs due to the halt of public works, and of workers from public companies. An adjustment that would be liked by the IMF, but that would strain the relationship with the governors since they would receive fewer resources. In addition, income to the provinces was affected by the changes in the Income Tax made by Sergio Massa as it is a co-participatory tax. Given Milei’s weakness in the National Congress due to not having his own majorities in the chambers, he needs to get the support of the governors and an adjustment to the provinces calls this into question.
For his part, Luis Caputo, who appears as a minister, lowered the price of the adjustment and in a meeting with the main bankers he assured that they should start by adjusting 2 points of GDP. It is not clear if Macri’s former minister made reference to the first planned government measures or if he only avoided mentioning the complete plan if they have it defined.
Gradualism seems to be a word on file for the next government. Mauricio Macri in his book Para qué. Learning about leadership and power to win the second half, he maintained that his weakness “had a name: gradualism,” and the former president believes that there are now better conditions for his reform plan. “The next government will be stronger and its strength will require that structural reforms be sanctioned in the first hours. Poverty and unemployment cannot wait. We must have the courage to immediately end obsolete legislation on labor, union, pension and tax matters. It is another of my lessons in the presidency. What is not done at the outset is very likely to never be done. The drastic reduction of public spending should be among the initial measures,” says Macri. His advice from a few months ago when the book was published coincides with Javier Milei’s declaration of intentions, but we will have to see if he can actually carry it out or he will once again face the rejection of the working class tired of years of decadence and degradation of the life conditions.
The Leliqs bomb
Another front that Javier Milei wants to resolve is the Leliqs. The economist assured that they have a “market solution” for this problem, but there are no confirmed details about this “solution.”
Leliqs are debt letters issued by the Central Bank and are in the hands of commercial banks, and currently that debt is approximately $11 billion. Banks do juicy business thanks to what they charge for interest, this is how private banks gained in the last twelve monthsfor all reasons, not only because of Leliq, but thanks to the Leliq, a billion pesos ($1,064,794 million). Last week, due to speculation about how they would be dismantled, there was a massive departure from this instrument towards passive repos, which are also a remunerated liability of the Central Bank but, unlike Leliqs, have a maturity of one day.
Luis Caputo met with the main bankers and assured that there would be no re-profiling or Bonex plan. What emerged in the media is that the “market solution” could be to exchange Leliqs for Treasury bonds, thus passing the debt from the hands of the Central Bank to the hands of financial capital. That is, it means more public debt in favor of the private sector. A strong devaluation would reduce the dollar value of the Central Bank’s liabilities, meaning it is another option that cannot be ruled out.
Another “solution” would be for Caputo to achieve a loan for US$15,000 million and with that sum repurchase the bonds issued by the Treasury. It is difficult for the “markets” to lend to a country with a large debt and a million-dollar agreement with the IMF pending renegotiation due to non-compliance with goals. Milei trusts in Caputo’s “expert financial doll” to achieve it, it must be remembered that he was the same one who in the Macri era prepared custom bonds almost as if it were a delivery for investment funds (speculators), according to journalist Alejandro. Bercovich. This Monday the president-elect will arrive in the United States along with Caputo and Posse; he is expected to have meetings with the Fund. Hunting for fresh dollars?
Face adjusting plans
During the last week that officials were appointed, others resigned and threats of dismissals circulated in the public sector, workers, state workers, public media workers, teachers began to carry out meetings and assemblies to discuss how to prepare for what’s coming. The working class is beginning to stretch its muscles.
The job insecurity that this Government deepened, the low salaries, the ongoing adjustment to comply with the IMF and the passive role of the CGT and the CTA It fueled the fragmentation of the working class. But today, faced with the war plan against the working people that Milei and Macri intend to carry out, it is necessary to organize, coordinate assemblies and plans of struggle between different sectors and the broadest unity of the working class between employed and unemployed workers to confront it. Not pass!