“With the terms in which progress has been made, it is no longer a useful law.” The statement is attributed to the Minister of the Interior, Guillermo Francos, after it had to be adjourn in which the article-by-article discussion of the omnibus law began. The legislative stoppage came before the discussion on the privatization of public companies. Under pressure from the opposition, the Executive differentiated between 37 entities to be completely privatized and 3 subject to partial privatization.
“In principle it is bad news“, analyzed Norberto Sosa, director of IEB. “The market expected that the project would undergo modifications, but that it could be approved in Congress. It was not even ruled out that the Senate would modify it and that it would have to return to the Lower House,” said the specialist. When asked by this media, a deputy from the radical force, who is also an economist, limited himself to a brief response: “I see it wrong”.
What will happen to the omnibus law from now on
According to the considerations of the Chamber of Deputies, when a project returns to committee it must be treated from scratch. This is determined by the article 155 of the chamber’s regulations: “A project that, after being sanctioned in general, or in general and partially in particular, returns to the Commission, upon consideration by the Chamber again, will be submitted to the ordinary procedure as if it had not received any sanction.”
In this way, the omnibus bill It must be submitted again for debate in the respective committees on Constitutional Affairs, General Legislation, and Budget and Finance.
Regarding where the first impact of this setback by the ruling party could be seen, Sosa estimated that in a “buying pressure on the dollar”, which this week “was calm”, after the success of the tenders for series 1 of BOPREAL, the bond that seeks the subscription of importers with commercial debt, in exchange for absorption of pesos. In his opinion, a “selling pressure” about sovereign bonds in dollarswhich “were showing an improvement”, since the parities are in the range of between 20% and 30%.
The technical team of Personal Investment Portfolio had highlighted on Monday that, at the local level, “the focus will be on what happens article by article” after the general approval of the Law Bases and Starting Points. “We know that the points linked to privatizations – where the ruling party has already made several concessions -, the delegated powers and the powers to take on external debt will be the most complicated to pass,” they warned. In turn, they had pointed out that “The pace of sovereign debt in dollars will continue to be highly influenced by the local level and the particular debate of the omnibus law.”
For Salvador Vitellihead of research at Romano Group, there could be tension in the CCL dollar, which collapsed more than $40 and snapped a bullish streak of three consecutive rises. Its price fell 3.2% to $1,252.55 and moved away from the $1,300 level. For its part, the gap with the official exchange rate stood at 51%.
For its part, Kevin Castilloeconomist member of the Policy Observatory for the National Economy (OPEN), analyzed: “It is possible that returning to a clean slate will have a negative impact given that the market can read that the Government you do not have the possibility of getting into debt and, therefore, show greater difficulties in paying the debt maturities to come.” The feasibility of meeting financial obligations occurs in a context where, for the economist, it is necessary that the country “present institutional improvements to make it more secure in the credit aspect”.
The Base Law includes, among other points, a special regime for large investments, the intention to modify the destination of the ANSES Sustainability Guarantee Fund (FGS), the possibility of borrowing without authorization from Congress, debt restructuring facilities of the Treasury, privatization of public companies and the incorporation of the economic, financial, fiscal, pension, tariff and energy emergency, among other central items within the economic aspect.
Finally, Claudio Capraruloconsultant economist Analytics, pointed out that the central thing had to do with the fiscal chapter and it has already been withdrawn. In that sense, although “these setbacks play against us and could raise alarms regarding the sustainability of the Milei program,” does not expect a strong reaction within the market. At least, for now.
Source: Ambito
