Argentina’s Chamber of Deputies to consider central bank reform
Argentina’s Chamber of Deputies will consider on Wednesday a reform of the central bank’s charter initiated by Javier Milei’s government. It is intended to prohibit the regulator from financing the fiscal deficit through money creation and make preserving the value of the currency its sole objective.
Changing the central bank’s mandate
The bill repeals five functions added to the institution’s mandate by the 2012 reform. They included promoting employment and economic development with social justice. Instead, the central bank will have one objective: preserving the value of the currency.
The document also prohibits the regulator from purchasing government bonds at the primary market at the national, provincial or municipal levels. This is the mechanism the central bank has historically used to finance the treasury. As MercoPress reports, central bank governor Santiago Bausili and his deputy Vladimir Werning supported the initiative at a meeting of the budget and finance committees.
According to them, the reform aims to protect the institution from political pressure by successive administrations and create a structure designed to prevent the return of high inflation.
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Other bills and indicators
At the same special session, deputies will also consider the “Fiscal Innocence II” bill. It expands a simplified scheme for bringing undeclared assets into the formal economy; the government estimates their volume at about $170 billion. The document removes annual income and asset limits for participation in the scheme and reduces by 25% the penalties for individuals, as well as small and medium-sized companies, that join it.
Victoria Tolosa Paz, a deputy from the opposition Unión por la Patria bloc, called for adding a provision that would prohibit officials from all three branches of government from using these benefits. The special session at noon was convened by La Libertad Avanza bloc leader Gabriel Bornoroni with the support of nine parliamentary groups, including PRO, Unión Cívica Radical and blocs linked to provincial governors. The government coalition believes it has the votes to approve the bills in the lower house.
The discussion will take place amid deteriorating financial indicators: in August, the country risk premium exceeded 470 basis points, while sovereign bonds lost a significant portion of their gains from the first half of the year. Delinquencies on loans to individuals reached 17.5% of total lending in June, according to a study by Universidad Austral and consulting firm Eco Go.
