Milei begins to design the new Argentina: announces privatizations, reduction of ministries and no more than 10 taxes

Just one day after Javier Milei was elected as Argentina’s new president, the libertarian began to announce his plan of action for his administration that will begin next December 10. Among the most notable announcements included the privatizations of important companies and public media, such as YPF, Telam, and Public TV. At the same time, he assured that he will steer the ship towards a fiscal structure that does not have more than “ten taxes” and that he will seek to repeal the controversial Rental Law.

The 53-year-old economist became the most-voted candidate in the history of the South American country on Sunday, with approximately 14 million votes in his favor, which allowed him to paint the electoral map violet, the color that distinguishes his political party, La Libertad Avanza (Freedom Advances). He even prevailed over Sergio Massa, his Peronist rival, in all but three districts: Formosa, Santiago del Estero and the Province of Buenos Aires.

Tax reform: no more than ten taxes

The morning after his election, Milei met with Eduardo Feinmann, a renowned local journalist, to talk with him on his radio program on the Radio Miter station. In a telephone conversation that lasted approximately 40 minutes, he confessed that he had not been able to sleep since he had to answer international calls. One of them was Luis Lacalle Pou, president of Uruguay, with whom he spoke at 4 in the morning.

Immediately afterward, he prepared to comment on some measures of his imminent administration, first in tax matters, perhaps one of the central points of his agenda.

To alleviate the tax burden of Argentines, who currently have more than 170 taxes, the libertarian spoke of seeking “an agreement with the provinces so that “the system is simplified and is not the torture it is today.” “We have to reach a friendly structure that does not exceed ten taxes. We need to reorganize that and the reform is already designed,” he indicated.

“The announcements confirm the change of course for Argentina, which is what the country needs to start growing. We are beginning to see concrete signs of what the state reform process would be, to have one with less public spending and that it be financeable so that we stop depending on monetary inflation and debt,” chief economist of the Libertad y Progreso Foundation, Eugenio Marí, commented when he spoke exclusively with Voz Media.

“Everything that can be in the hands of the private sector, will be in the hands of the private sector”

In addition, he spoke about the privatization of public companies, such as Public Television, a media outlet owned by the Argentine state. “I do not adhere to those practices of having a covert Ministry of Propaganda: it has to be privatized. The same with National Radio. Everything that can be in the hands of the private sector will be in the hands of the private sector,” he expressed in this regard.

“We consider that Public Television has become a propaganda mechanism. During the campaign, 75% of the time that our campaign was talked about, it was done in a very negative way, supporting a dirty campaign, the campaign of fear,” he added.

“Today, the national state has public companies that register losses of 6,000 million dollars per year. So privatizations are a way to begin to reduce that deficit, but at the same time improving the provision of goods and services for all Argentines,” Marí added in this regard.

Substantial reduction of the state: from 18 to 8 ministries

The president-elect has already expressed himself in favor of reducing the number of ministries, which are currently 18 in total, to slim down to only eight.

Very similar in structure to the proposal presented at the time by the Freedom and Progress Foundation to Milei’s team, the only ministries of the new government are set to be Defense, Justice, Economy, Foreign Affairs, Infrastructure, Security, Interior and Human Capital, which will absorb the structures of Social Development, Health, Labor and Education.

New presidential lifestyle

Unlike his predecessors, the economist will not work every day in the Casa Rosada (Pink House), which is the pink-painted version of the White House. Instead, he will have his main office at Quinta de Olivos, the residence of all Argentine presidents.

“I’m going to move to Olivos and I’m going to settle there, so I work from the moment I wake up until I go to sleep. The idea is to have everything ready in Olivos to be connected to work 24/7,” he declared.

The YPF case

Yacimientos Petroliferos Fiscales (YPF) is an energy company from Argentina that happens to be the largest oil company in the region. Regarding its corporate composition, the Argentine government owns 51%, while the remaining 49% is listed on the Buenos Aires Stock Exchange.

In the 1990s, it passed into private hands during the government of Carlos Saúl Menem, remaining in control of the Spanish company Repsol, which acquired 97% of YPF in 1999. However, in 2012, President Cristina Fernández de Kirchner decided to expropriate 51% of the company. By doing so without offering compensation to all shareholders, the situation escalated into a legal dispute, which did not end well for the South American country.

In September 2023, the sentence of Judge Loretta Preska of the Southern District Court of Manhattan, who ruled that Argentina must pay $16.1 billion to Burford Capital, was confirmed.

The investment fund had acquired the bankruptcy process of 2 companies of the Petersen Group: Petersen Energía Inversora and Petersen Energía, which owned shares for 25% of YPF, purchased from the Spanish oil company Repsol in 2 operations in 2008 and 2011.

According to the primary demand, supported in article 7 of the YPF Statute, if someone bought more than 15% of the company, they should offer the same to all shareholders and not just Repsol.

“YPF first has to be fixed. Since Mr. Kicillof decided to nationalize it, not only with a loss of 16 billion dollars but also the deterioration that has been done to the company, in terms of results, so that it is worth much less than when it was expropriated. Obviously, the first thing to do is put it back together,” Milei explained in his interview with Feinmann.

“In the transition that we are thinking about in the energy issue, both Enarsa and YPF have a role. Meanwhile, these structures are rationalized; they are put there to create value, and in this way, they can be sold in a very beneficial way for all Argentines. All measures are aimed at restoring the economic-financial balance and without causing harm to the Argentines. And always having a special case for the most vulnerable segments,” concluded the newly elected president of Argentina, who will take office on December 10.