Argentina’s president-elect wants public companies in private hands, with media first to go

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Argentina’s incoming president, Javier Milei, a self-described “anarcho-capitalist” and libertarian economist, is wasting no time in outlining his plans for South America’s second-largest economy. He secured a resounding victory in the presidential runoff election, winning 55.7% of the vote. Milei’s key focus is on privatizing state-owned assets, starting with the country’s public media outlets and potentially extending to other public companies.

In a recent radio interview, Milei expressed his commitment to transferring assets to the private sector, stating, “Everything that can be in the hands of the private sector will be in the hands of the private sector.” This ambitious goal raises questions about the feasibility of such privatizations, given that his party holds a relatively small share of seats in Argentina’s National Congress.

Despite potential legislative hurdles, Milei’s decisive election win has bolstered his position. Mariano Machado, a principal analyst at Verisk Maplecroft, noted that this victory allows him to assert control over the transition and Cabinet formation, signaling his determination.

Milei has been critical of the state-run media outlets, referring to them as a “covert ministry of propaganda.” He has also voiced intentions to reduce the size of the government, including halving the number of government ministries to eight. His most controversial proposal involves closing the Central Bank of Argentina, although he suggested that the choice of the national currency would be determined by the people.

One of Milei’s economic challenges is tackling Argentina’s soaring inflation, which has reached triple digits, causing significant concern among voters. He anticipates that it will take between 18 and 24 months to address this issue effectively.

Among the entities on Milei’s privatization radar is YPF, the state-controlled energy firm. However, he emphasizes the need to stabilize its finances before privatization to benefit the Argentine population.

While Milei’s privatization plans may face constitutional and legislative obstacles, he could explore alternatives such as gradual defunding of state-owned enterprises. Nonetheless, the complexity of privatizing YPF, given the division of state-owned shares between the federal government and provinces, presents additional challenges.

The financial markets have responded positively to Milei’s agenda, with the stocks of Argentine companies trading in New York experiencing significant gains. However, the road to achieving his privatization goals remains uncertain, contingent on political maneuvering and potential legal battles in Argentina’s political landscape.

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• Javier Milei: Argentina’s president-elect
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• Argentina’s Inflation Woes
• YPF Privatization Considerations