Milei’s First Decree Aims to Boost Argentina’s Exports and Economy

Argentina’s newly sworn-in President Javier Milei signed his first decree on Tuesday, aiming to boost the country’s exports and economy by easing regulations and taxes on key sectors. The decree, which was published in the official gazette, covers areas such as agriculture, mining, energy, manufacturing, and services.

Milei, who won the presidential runoff on November 19 with 56% of the votes, has promised to implement a radical economic reform agenda based on libertarian principles. He has vowed to slash public spending, privatize state-owned companies, eliminate most taxes, and eventually dollarize the economy.

Milei’s First Decree Aims to Boost Argentina’s Exports and Economy
Milei’s First Decree Aims to Boost Argentina’s Exports and Economy

The decree marks a sharp contrast from the previous government of Alberto Fernandez, who imposed strict capital controls, currency restrictions, and export taxes to deal with the country’s chronic fiscal and monetary imbalances. Argentina has been suffering from high inflation, low growth, and a heavy debt burden for years.

The Main Measures of the Decree

The decree includes the following main measures:

  • Eliminating export taxes on agricultural products, such as soybeans, corn, wheat, and beef, which are the main sources of foreign currency for the country.
  • Reducing the income tax rate for mining companies from 30% to 25%, and granting them a 10-year stability clause that guarantees no changes in their tax regime.
  • Creating a special regime for energy companies that invest in renewable sources, such as wind, solar, and biomass, and granting them tax exemptions and subsidies.
  • Simplifying the procedures and requirements for exporting goods and services, and reducing the bureaucracy and red tape that hinder trade.
  • Establishing a single window system for foreign trade, where exporters and importers can access all the information and services they need in one place.
  • Promoting the development of regional economies and small and medium enterprises, by providing them with credit facilities, tax incentives, and technical assistance.

The Expected Impact of the Decree

The decree is expected to have a positive impact on Argentina’s exports and economy, by increasing the competitiveness and productivity of the productive sectors, attracting foreign investment, creating jobs, and generating more revenues for the state.

According to the Economy Ministry, the decree could boost the country’s exports by $12 billion per year, and increase the gross domestic product (GDP) by 1.5%. The ministry also estimates that the decree could create 210,000 new jobs, and reduce the poverty rate by 3.5 percentage points.

Milei said that the decree is the first step in his plan to revive the economy and restore confidence in the country. He said that he will continue to implement more reforms in the coming months, such as renegotiating the country’s debt with the International Monetary Fund (IMF), reforming the pension system, and abolishing the central bank.

The Reaction of the Markets and the Opposition

The markets reacted positively to the decree, as the peso strengthened against the dollar, and the country risk index, which measures the difference between Argentine and U.S. bond yields, fell to its lowest level since 2019. The stock market also rose, as the shares of companies in the affected sectors gained value.

However, the decree also faced criticism from the opposition and some sectors of society, who argued that it will benefit only a few groups, and that it will have negative social and environmental consequences. They said that the decree will reduce the state’s role in regulating and protecting the economy, and that it will increase the dependence on external markets and the vulnerability to external shocks.

The opposition also questioned the legality and constitutionality of the decree, saying that it bypasses the Congress and the provincial governments, and that it violates the federal system and the separation of powers. They said that they will challenge the decree in the courts, and that they will mobilize their supporters to protest against it.

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