President Javier Milei’s push to restrict the Central Bank from printing money to finance Argentina’s Treasury is on track after lawmakers in the lower house backed his bid to reform the institution’s charter.
On Wednesday evening, the Chamber of Deputies approved a bill to reform the Central Bank’s charter with 144 votes in favour, 102 against and 9 abstentions.
The ball now moves into the Senate’s court, where Milei’s government does not have a majority and where La Libertad Avanza and its allies face the tougher task of finding the numbers to turn one of the President’s central economic pledges into law.
The Milei administration wants to prevent the Central Bank from financing the Treasury through money printing, which can put upward pressure on prices. Specifically, it would ban transitory advances to the Treasury, loans to the provinces and the use of non-transferable bonds, while limiting the transfer of the Central Bank’s profits to earnings it has actually realised.
Milei says the reform will help his government rein in inflation, which has driven decades of economic instability in Argentina.
“Many thanks to the National Deputies for supporting this measure to reform the BCRA,” wrote the President in a post on X, using the acronym for Argentina’s Central Bank. “A fundamental step to eradicating inflation from the lives of decent Argentines…!!!”
The bill states that the Central Bank’s “primary and fundamental mission” is to preserve the value of the currency. Economist Martín Kalos told the AFP news agency that this essentially means “trying to ensure there isn’t much inflation.”
If it passes the Senate, the reform would also remove the Central Bank’s objectives of promoting employment and equitable economic development, which were introduced under former president Cristina Fernández de Kirchner. It would also strip it of powers to direct credit towards specific sectors of the economy.
The reform would also make it harder to remove the Central Bank’s governor and board members, requiring lawmakers to prove “serious cause” and secure a two-thirds majority in both chambers of Congress. Opposition lawmakers connected that safeguard directly to Governor Santiago Bausili, Milei’s pick to chair the Central Bank’s board, and to his professional ties with Economy Minister Luis Caputo.
During debate, deputy Miguel Ángel Pichetto, representing moderate opposition caucus Encuentro Federal, said he had “never agreed with a rigid approach.” The veteran politician argued that politics comes before economics and that the Central Bank should be “subordinate to the general interest of the country” and to whatever direction the Executive branch sets, with growth and development in mind.
He added: “Do you really think you can pull the wool over people’s eyes with Mr Bausili? You talk about autonomy when the Central Bank’s governor is a partner at the firm where he worked alongside the economy minister, and they’ve had that trading relationship for many years. What autonomy are you talking about? You want to have this debate over the charter and still keep on a Central Bank governor who is Minister Caputo’s partner and friend.”
Julia Strada, a deputy for opposition Peronist caucus Unión por la Patria, was even more blunt, branding the bill a “scam.”
“Let’s stop for a moment with the independence fallacy,” she said from the floor, noting Bausilli’s previous career and government posts. “What they’re doing is locking in an employee – Minister Caputo’s business partner.”
Wearing a La Libertad Avanza T-shirt, ruling party deputy Silvana Giudici described the bill as “one of the most important reforms of recent years” and hit back at Strada, blaming the Peronist opposition for Argentina’s economic woes and stating the reform would prevent “disasters such as the crisis” inherited by Milei from former president Alberto Fernández.
Combating inflation has been one of Milei’s primary objectives since taking office in December 2023, when inflation was running at a triple-digit annual rate.
Year-on-year inflation has now fallen to 33.8 percent as of July, following steep cuts in public spending under Milei.
– TIMES/AFP/NA
