The Financial Times talks about Federico Sturzenegger’s “chainsaw a la carte”

This Monday, November 4, the British Financial Times published an article about the Minister of Deregulation and State Transformation, Federico Sturzenegger, in which he talks about his “chainsaw a la carte” plan.

“Federico Sturzenegger has a great ambition: to convert Argentina, from one of the most regulated countries in the world, in the freest economy on the planet”, The FT note points out from the first paragraph.

The note talks about Sturzenegger’s mission that aims to drastically reduce the Argentine regulatory framework, to transform the country into the “freest economy in the world”.

Appointed by President Javier Milei following the libertarian leader’s election victory a year ago, “Sturzenegger has classified the South American nation’s approximately 4,200 laws” into three categories: “Scrap, change or maintain.”

“The worse the society, the more law there will be. In hell, there is only law,” Sturzenegger, former head of the Central Bank, told the Financial Times, quoting the late US law professor Grant Gilmore. “Let’s dismantle all that”added the minister.

The text, which bears the signatures of Michael Stott and Ciara Nugent, warns that the official has a lot of work ahead of him, as Milei seeks to fulfill his electoral promise of “take a chainsaw to the State”.

According to the Financial Times, one of the biggest challenges that Sturzenegger faces is the little economic freedom that Argentina has. “The country ranks 145th in the Economic Freedom Index prepared by the Heritage Foundation, below Uganda and only slightly above Pakistan,” the publication notes.

Milei’s party, La Libertad Avanza, also has only a small minority in both chambers of Congress, “which forces the Government to improvise ad hoc coalitions to approve laws,” the authors detail.

“To get around this in the short term, Milei persuaded Congress in June to grant him emergency powers for a year and pass a wide-ranging “omnibus law,” he adds. And he adds: “The President also issued a broad emergency decree that annulled or modified more than 300 regulations in December”.

For his part, Sturzenegger confided to the FT: “This delegation (of power) was extraordinarily broad. Entities can be closed (government), practically any part of the public administration can be restructured“.

The British media highlights in its article that “the result has been a bold experiment in free market shock therapy.” In this regard, he highlights the results obtained so far: “Milei reduced the country’s budget deficit from around 5% of GDP to zero almost overnight, through measures such as stopping all capital spending and increasing pensions. and government salaries below Argentina’s inflation rate, which reached 209% in the year to the end of September, the most recent figure available.”

In any case, the FT shows the other side of the coin, warning that economists and opposition politicians question how sustainable some of the President’s cuts are.

There appears, for example, a recent JPMorgan note in which it warns that “There is more limited space to continue adjusting expenses” next year. “The decline of real pensions and […] Salaries are likely not to be repeated next (election) year, with inflation trending downward, while capital spending and transfers to the provinces are already at historic lows,” he said.

“I don’t see that they are going to go to a better state“said Martín Lousteau, a centrist figure from the opposition Radical Party. Milei “has the idea that Argentina can lower public spending by 13 more points of GDP, and that will free up more productive forces. “I don’t think that path is possible.”

“Everywhere we have deregulated there have been significant drops in the real price of goods”said Sturzenegger.

And in another passage he warned: “Argentina is trapped in a Bermuda triangle,” Sturzenegger said, noting that its “three vertices” are “the business caste, which has made Argentina the second most closed market in the world”, the unions y the left-wing Peronist partywho ruled Argentina for most of 41 years since it returned to democracy in 1983.

“I call the Peronist party the Argentine Conservative Party,” said the minister. “It is the party of interest groups, the party that will defend the interests of the unions and the interests of large companies to the detriment of the general population.”

The FT, however, highlights that “Peronist leaders claim that many Argentines want a bigger and better state instead of Milei’s reduced alternative.”

“The agenda [de desregulación] It’s not just a freedom agenda,” Sturzenegger said. “We believe that free people who trade freely will find the best deals for both sides.”