Milei Will Need Time to Abolish Peso if Elected, Advisers Indicate

By Anna-Catherine Brigida

BUENOS AIRES (Reuters) – Javier Milei, the radical presidential front-runner in Argentina, will require time to implement his campaign promises of eliminating the peso and reducing agricultural taxes if he secures victory in the upcoming election. Advisers have indicated that he may navigate congressional obstacles through executive decrees.

Ramiro Marra, a close associate of Milei and his party’s candidate for the Buenos Aires mayoralty, mentioned that Milei, who achieved an unexpected triumph in this month’s primary, intends to dollarize the economy within two years and eliminate taxes on the expansive agricultural sector if elected.

However, Marra cautioned that supporters of Milei—a self-proclaimed libertarian and political outsider known for his provocative television commentary—should have realistic expectations regarding the timeline of his proposals.

"It is essential to understand that administrative proposals do not materialize overnight," Marra stated in an interview at his investment firm in Buenos Aires. He emphasized that whoever wins the election on October 22, or potentially in a November runoff, will face "challenging months" ahead.

Juan Napoli, also a candidate for a Senate position with Milei’s party, concurred that laying the groundwork for reforms will require time.

Marra suggested that the dollarization process may take between nine months and two years, though he did not specify a timeline for abolishing grain export taxes, a crucial component of the national economy, while asserting that achieving this goal remains a priority.

“We believe that we must ease restrictions on the agricultural sector,” he asserted, pointing to "inefficiencies caused by direct and indirect taxation" that hampers its growth. He cited Chile’s free-market model as a source of inspiration for proposed changes.

Milei’s proposals have struck a chord with voters grappling with 113% annual inflation and sluggish economic growth, as many express frustration towards traditional political entities: the ruling left-leaning Peronist bloc and the conservative Together for Change coalition.

With poverty affecting nearly 40% of the population, a benchmark interest rate soaring to 118%, depleted foreign currency reserves, and strict capital controls leading to multiple parallel currency exchange markets, voters are seeking drastic changes.

Milei captured 30% of the votes in the recent open primary, placing him ahead of the Peronist coalition at 27% and the conservative opposition at 28%. The presidential candidates for the two blocs are Economy Minister Sergio Massa and former security minister Patricia Bullrich.

Given that Milei is unlikely to secure a majority in Congress even if he wins the presidency, Marra stated that the focus would be on "planting the seeds" for a longer-term economic recovery while seeking ways to sidestep any congressional resistance.

This could involve conducting plebiscites or utilizing executive decrees, as prescribed by law and the national constitution. "We will utilize all available alternatives," he affirmed.