The ruling party secured on Wednesday a majority opinion to reform the Organic Charter of the Central Bank, one of the economic initiatives promoted by the Government of Javier Milei to restrict monetary financing of the fiscal deficit and reinforce the independence of the monetary authority.
La Libertad Avanza gathered support from the PRO, the UCR, Federal Innovation, and Production and Labor, so the project is set to reach the Chamber of Deputies on August 26, when the treatment of Fiscal Innocence II is also scheduled.
The president of the Finance and Budget Commission and Treasury Santiago Pauli alongside Bertie Benegas Lynch
One of the central points of the reform is the explicit prohibition of direct or indirect financing of the Treasury by the Central Bank. If approved, the entity will not be able to provide temporary advances or directly purchase public securities in the primary market, mechanisms used for decades to cover fiscal imbalances through monetary issuance.
The initiative also modifies the framework established during the Kirchnerism in 2012. That reform had incorporated among the objectives of the BCRA financial stability, employment, and economic development with social equity. The project promoted by the Government establishes as its central objective the preservation of the currency's value.
Additionally, it prohibits transferring accounting profits or those generated by exchange rate differences to the Treasury. The positive results of the agency must be prioritized for absorbing accumulated losses, restoring its equity, or paying off public debt. It also proposes eliminating instruments such as Non-Transferable Bills and updating the regulations related to the management of international reserves.
Another change establishes stricter requirements for removing the president of the Central Bank or members of its board. It will be necessary to prove a “serious cause” and obtain a two-thirds majority in both the Chamber of Deputies and the Senate.
The liberal economist Miguel Boggiano was among the speakers
The plenary of the Budget and Finance committees was marked by intense political clashes following the presentations by economists Miguel Boggiano, Héctor Rubini, Ramiro Castiñeira, and Aldo Abram, summoned by La Libertad Avanza to defend the reform.
Unión por la Patria ultimately decided to withdraw from the plenary, after questioning the presentations of the guests summoned by the ruling party, without managing to impose a rejection opinion. Despite the tensions with Kirchnerism, La Libertad Avanza secured the necessary signatures and left the reform ready for discussion in the chamber.
