Benefits for the usual suspects: for the economic elite. Economy column from El Círculo Rojo, a program from La Izquierda Diario on Radio Con Vos, 89.9. In text and video.

  • The Omnibus Law that the Government of Javier Milei sent to Congress this Wednesday contains so many attacks on those below and so many benefits for those above that it is very difficult to start somewhere.
  • To summarize, it is clear that Milei seeks to concentrate all power, while article 3 declares “the public emergency in economic, financial, fiscal, pension, security, defense, tariff, energy, health, administrative and social matters up to on December 31, 2025.”
  • This means, quite simply, that the Executive Branch will be able to decide, without following current regulations, on all these issues.
  • Let’s review some of the main aspects in economic terms.
  • For retirement benefits, Article 106 establishes that the application of the mobility formula is suspended. Not only that. It authorizes increases made by the Executive Branch, supposedly primarily benefiting low-income seniors, that is, those who earn the minimum salary. But not so for the rest of the retirees, who receive income above the minimum and who could begin to lose more than they have lost until now.
  • The announcement of the continuity during January and February of the $55,000 bonus for minimum assets, without any additional increase, in a context with inflation above 20%, implies that retirement assets are already being liquidated.
  • The Omnibus Law also empowers the Executive to establish the new formula. The Government of Alberto Fernández also suspended the retirement mobility formula and then brought a new proposal to Congress, which we have criticized, but which was voted there. Now, perhaps, the Executive could implement a new formula without going through Congress.
  • If this suspension of retirement mobility is combined with the Excel table that was disseminated by the Ministry of Economy after the message that Luis Caputo gave two weeks ago to present the economic program, one cannot deduce anything other than that it will adjust to the retirees and retirees. This table established a saving of 0.4% of GDP in retirement benefits. It seems little in relation to GDP, but it is a lot for the mass of retirement assets.
  • Older adults are also going to be affected, more precisely robbed, of the resources that exist in the ANSES Sustainability Guarantee Fund (FGS), which will pass into the hands of the Treasury, that is, the Ministry of Economy.
  • The FGS emerged when the AFJP was terminated in 2007. The AFJP had investments in companies and other assets. All of that passed into the hands of the FGS.
  • In addition to company shares, the FGS has public debt in its hands that would be canceled by the bureaucratic decision to transfer all assets to the Treasury. That is, a kind of default or God pays retirees.
  • But, in addition, the FGS has shares of 41 private companies and other financial placements. It has, among others, shares in Grupo Clarín, Pampa Energía, and Banco Macro. By removing all types of regulations and restrictions to operate with the assets of the FGS and by passing all the assets into the hands of Luis Caputo, that is, into dangerous hands.
  • Therefore, it cannot be ruled out that something that the IMF had already indicated during the Government of Mauricio Macri will be done. Macrismo tried to advance, but did not do much. If the perspective is that the Treasury sells the shares of companies in the hands of the FGS, in principle it can cause damage to the companies if the price of the shares drops when a large bidder appears. But this could be an opportunity for Grupo Clarín, Pampa Energía, and Banco Macro to buy back shares at a low price.
  • It’s music from the future. We have no evidence, but we also have no doubt that this may be the perspective. The latest valuation of the FGS is US$76 billion. That valuation was made at the previous official exchange rate. Now it is likely to have been devalued. Anyway, it’s a lot of money that will be stolen from retirees.
  • Regarding public debt, the Omnibus Law proposes two central changes. On the one hand, it repeals the law promoted by Martín Guzmán that required foreign debt to go through Congress.
  • On the other hand, the criterion that exists until now, by the financial administration law, that any debt restructuring has to improve the interest rate, term or amount of the debt is removed.
  • Money laundering that, for example, exempts anyone who launders up to US$100,000 from paying anything. For higher amounts there will be progressive scales, but very reduced.
  • Not only that. In parallel, a progressive reduction in the personal property tax is proposed. Therefore, whoever launders will pay little now, but also in the future thanks to the reduction of the personal property tax.
  • More generally, a special regime is proposed for large investments with tax reductions and fiscal stability for thirty years. For example, the maximum rate for Income Tax will be 25% when the current maximum rate is 35%. Therefore, if in the future a government, due to a crisis situation or whatever reason, wants to increase a tax, it will not be able to affect companies that invest within the framework of the special regime.
  • It is also proposed to privatize public companies or companies where the state has a shareholding, among others YPF, Enarsa, Nucleoeléctrica Argentina.
  • In hydrocarbons, whose epicenter is the Vaca Muerta development, the omnibus law repeals the objective of “self-sufficiency” and explicitly changes it to “increase income.” This implies that exports and imports are released.
  • In hydrocarbons it is becoming increasingly clear that companies are being freed to do big business and that Paolo Rocca’s Techint, with Tecpetrol operating in Vaca Muerta, emerges as one of the big winners of the Milei era. I recommend a note by Esteban Martiné in La Izquierda Diario where he details all the benefits that exist for oil companies.
  • In addition to the Omnibus Law, the government sent for treatment in extraordinary sessions of Congress, other projects such as the one that restores the Income Tax for a large part of workers, another that seeks the implementation of the single electoral ballot system and several bilateral agreements on “double taxation”. These are agreements with Japan, Luxembourg, China and Türkiye.
  • They will benefit multinational companies based in countries with reduced tax burdens in relation to Argentina. The agreements sent to Congress were promoted by the Government of Mauricio Macri.
  • If they are approved, the implication is that the State loses revenue because multinationals will pay less taxes. Among the beneficiaries are Techint, based in Luxembourg, the Japanese Toyota and Chinese multinationals, such as the ISBC Bank.
  • At the same time that the tax burden on multinationals is reduced, the number of workers who will be reached by the Income Tax applied to salaries will increase, although the new project on salary tax has not yet reached Congress.
  • As is evident, the Omnibus Law is actually a ghost train that brings benefits for the usual suspects: for the economic elite, for the richest caste in the country.

Economy / National Economy / Pension Mobility Law / Javier Milei / The Red Circle / Omnibus Law


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