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The May Pact in Argentina establishes ten principles for a reformed institutional and economic order

by | Apr 13, 2024

Business sectors support the call for the May Pact in Argentina proposed by President Javier Milei, highlighting the importance of a national consensus.

The Argentine Confederation of Medium Enterprises (CAME), the Institute for Business Development of Argentina (IDEA), the Association of Argentine Banks ( Adeba ), the Inter-American Council of Commerce and Production ( Cicyp ), and the United States Chamber of Commerce United in Argentina (AmCham) have expressed their support for the call made by President Javier Milei for a May Pact, underlining the need for dialogue, negotiation and agreements between the different sectors of Argentine politics. These endorsements are added to those of other business chambers that have already praised the announced measures.

The effort by the head of the Government of Buenos Aires to work seriously and responsibly to reach a great national agreement is positively valued. “The recently made call by President Javier Milei to the May Pact in Argentina, during the Opening of Ordinary Sessions 2024 of the National Congress, moves exactly along those lines,” states the statement from CAME, which represents more than 400,000 SME companies throughout Argentina.

For its part, IDEA celebrates the presidential initiative to establish ten basic principles of the economic order, considering it a gesture of hope for the country. “The call to governors and former presidents made recently by President Javier Milei to establish ten basic principles of the economic order is a gesture… that fills us with hope,” says the IDEA statement. The entity entirely agrees with the proposed points, aligning with the proposals it had been promoting to reverse decades of social and economic deterioration in Argentina.

Both organizations emphasize the importance of this moment as an opportunity for the country to move towards sustainable development, respecting private property, and establishing modern and sustainable tax, labor, and pension regimes.

Support for the May Pact in Argentina is not limited to these entities. On a recent Friday, business chambers such as the Argentine Chamber of Commerce (CAC) and the entity that brings together cereal exporters, CIARA-CEC, in addition to the Agroindustrial Council Argentino (CAA) and the Grain Exchange had also expressed their support for the proposed labor and tax reforms, as well as the inviolability of private property in Argentina.

A similar message arrived almost at the same time from the exporting entity. “The speech of the President of the Nation, Javier Milei, at the Opening of Ordinary Sessions was forceful, clear, and precise in the path to get out of this deep economic and social crisis. We encourage the governors to join the May Pact in Argentina, which should lay the foundations for the sustainable development that our country needs with foreign trade with added value that is the key to growth,” stated the brief but firm CIARA-CEC text.

More support emerged among entities linked to the field. The Argentine Agroindustrial Council (CAA) supported the presidential call: “We urge political forces, provincial governments, legislators and business and worker union entities to work to ensure that “Mayo Cordobés” is the starting point of a new Argentina that attracts investments, generates quality employment and value-added exported products.”

“The diagnosis and course of action proposed by President Milei are going in the right direction. From our organization’s perspective, we firmly support the deregulation process that the National Government is carrying out, as well as the forceful fiscal and monetary order, austerity in the management of public funds, and the fight against entrenched corruption in various areas,” said Mario. Grinman, President of the CAC, shortly after the President’s message concluded.

In the same sense, the Grain Exchange made “a call to political forces to turn the May Pact in Argentina into the starting point for the construction of a new Argentina. Achieving long-term policies is the way to grow and generate employment federally. At the same time, we express our commitment and support for the initiative.”

Pending challenges

Also, the United States Chamber of Commerce in Argentina ( AmCham ) highlighted that the President’s initiative to call on the different political spaces to adhere to these principles is a step in the right direction. “Argentina faces a series of complex challenges that range from strong macroeconomic distortions to alarming social problems. The only way to overcome these obstacles and build a sustainable future is to move towards a normal Western country model,” highlighted AmCham.

“It is necessary to emphasize that the success of the May Pact in Argentina will depend on the sincerity and openness of all parties. A broad agreement from all governments and political parties would signal that the local and international private sector is seriously waiting to consider Argentina a safe investment destination. The reconstruction of Argentina is a task that involves everyone. Turning Argentina into a viable country depends on our ability to overcome differences and work together urgently to build a sustainable future,” the organization added.

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Bank support for the May Pact in Argentina

The Association of Argentine Banks ( Adeba ) celebrated President Milei’s call to representatives of the country’s political forces to establish ten institutional and economic order guiding principles. “The economic and institutional development of the country requires agreements on adequate basic principles, which are maintained over time, and which frame the actions of successive government administrations. This is a necessary condition to reduce poverty and improve the income levels of the entire population,” Adeba noted.

Likewise, the organization’s representatives indicated that the financial system is in condition and able to provide the financial services that economic and employment growth require. In addition, Adeba assured that its membership has the solvency, liquidity, processes, and technology to do so.

“We trust that each of the parties involved will make the necessary efforts to understand the importance of reaching an agreement that is as broad as possible, which allows Argentina to achieve comprehensive development of society,” they concluded.

Their peers from the Association of Banks of Argentina (ABA) also expressed “their support for the call made by the Presidency of the Nation to the provincial administrations to agree on a series of basic guidelines included in the ten points detailed in the May Pact of Argentina.”

“The dialogue between the leaders of the different political forces, as well as the coordination between the public and private sectors, are essential for the delineation of public policies, regulatory changes, and agreements on the responsible use of public resources, necessary for the generation of formal jobs and the opening of markets for regional economies that allow the strategic insertion of Argentina with all its potential on the global stage,” ABA indicated.

For these reasons, “the Association calls on the governors and leaders of the different political forces to work jointly with the national government and the private sector to reach the essential consensus to reverse the current crisis, to establish a path of sustainable growth and improve the quality of life of all citizens.”

The May Pact of Argentina is an opportunity

The Inter-American Council of Commerce and Production (CICYP) also showed its support for the words expressed by President Javier Milei during his opening speech of the 142nd period of ordinary sessions in the National Congress. “We consider that these statements place the country before a unique opportunity to return to the path of development and reestablish fundamental consensus, thus avoiding a new failure,” the CICYP  stated.

For the Council’s representatives, the “May Pact” contains principles already enshrined in the National Constitution, which have not been exempt from recurring sieges that placed Argentina in multiple scenarios of extreme unpredictability over the decades. “The defense of private property, as well as respect for freedom of trade and openness to the world, are essential values if Argentina is to become an attractive destination for investments once again,” the organization noted.

“It is for this reason that the reform that modernizes labor relations, the reduction of public spending, the relief of tax pressure, and the defense of fiscal balance must become one of the indisputable aspects of the path to be followed,” the CICYP concluded.

The May Pact in Argentina: What exactly are the ten principles?

  1. The inviolability of private property.
  2. The non-negotiable fiscal balance.
  3. The reduction of public spending to historical levels, around 25% of the Gross Domestic Product.
  4. A tax reform that reduces tax pressure simplifies the lives of Argentines and promotes trade.
  5. The reconsideration of the federal tax-sharing scheme that will forever end the current extortionate model.
  6. A commitment by the provinces to advance exploiting the country’s natural resources.
  7. A modern labor reform that promotes formal work.
  8. A pension reform that gives sustainability to the system respects those who contributed and allows those who prefer to subscribe to a private retirement system.
  9. A structural political reform that modifies the current system and realigns the interests of the representatives and those represented.
  10. Opening to international trade so that Argentina again becomes a protagonist in the global market.

In conclusion, the call for the May Pact in Argentina, spearheaded by President Javier Milei, has garnered significant support from various sectors of society, including business chambers, financial institutions, and trade councils. This initiative establishes ten fundamental institutional and economic order principles and signifies a collective effort toward national consensus and sustainable development. Focusing on vital issues such as private property rights, fiscal responsibility, and economic reform, the May Pact presents a promising opportunity for Argentina to overcome challenges and become a competitive player globally. All public and private stakeholders must commit to sincere dialogue and collaboration to ensure the successful implementation of these principles and pave the way for a brighter future for the nation.

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