After the first month of Javier Milei’s presidential term, it is possible to evaluate some of his measures. On December 12, the Minister of Economy Luis Caputo ordered that the exchange rate (official dollar) go from $360 to $800. A devaluation that is added to the paralysis of public works (except for the Northern gas pipeline that was already concessioned by Techint ) which is equivalent to the loss of nearly 250,000 direct construction jobs, and 1 million in total with the companies that supply builders, which would be equivalent to almost doubling unemployment of 6.3% in March or June 2024. This increase in Unemployment would mean sending about 4 million Argentines into poverty due to lack of income, which would mean going to about 54% of poor people according to the UCA.
Only those 2 measures added to DNU 70/2023 of quasi-total deregulation of the economy devised by Federico Sturzenegger for a government of Patricia Bullrich, generated disproportionate increases in prices in goods and services that led to doubling the average inflation that we had until November (12 %) and in December only due to the devaluation it was 25.5%. From January onwards we will have the results of the price increase and data close to 100% accumulated inflation is estimated for the first quarter of the year.
As a result of all this, today we have precautionary measures granted by the Judiciary from the Labor and Administrative Litigation side that are beginning to reach the CSJN due to appeals from provinces such as La Rioja and the appeals granted to the protections granted by the CNAT to the CGT and the CTA. Even DNU 70/2023 includes topics that art 99, paragraph 3 of the CN outright prohibits, such as modifying the customs code.
The most important thing is the measures taken. And secondly, who would have approved its implementation. Since his signature is undoubtedly the President’s, and he must assume his responsibilities in the future, but both the Legal and Technical Secretariat and the General Secretariat of the Presidency of the Nation have his part. And it is essential that they be exercised by people with technical knowledge acquired academically or, failing that, through experience in the National Public Administration. Otherwise we could find ourselves with negligence in the fulfillment of the duties of a public official but always remembering that ignorance of the Law, in our Penal Code, does not mean that non-compliance with it is justified, making them criminally liable.
In tax matters, the Country Tax was raised for digital services a few days after the inauguration, the ATN was removed from the provinces (Córdoba being the last to receive $3MM 10 days ago), it was intended to place 15% withholdings on the economies regions that are at 0%, want the governors to take charge of the political cost of repealing the elimination of the 4th category of Workers’ Profits, although for this purpose they presented a bill to repeal it with a base floor of $1,350,000 in gross, that is, $1,120,000 in hand since September 2023 (making it retroactive, a very foolish thing that does not correspond to any tax Law; worthy of those who do not know how the Laws are generated) and adjustable quarterly by CPI, which would mean that in a A period of no more than 5 months would have about 1.2 million incorporated into it instead of the 800 thousand workers who paid it as of September 2023. In addition, it is worth highlighting the nutritional nature of the salary and the right of non-retention acquired by Law.
All in all, this leads us to a self-generated nominal hyperinflation that would currently be around 3000% annually in 2024 and an exchange rate of $7,000 to US$1 at the end of this year, since we were in relative hyperinflation since January 2018 and had entered into a recession process that has been entrenched since May and August 2018, when agreements were signed with the IMF requesting loans of US$36 and 58 MM, respectively.
