On Thursday night, Argentine President Javier Milei officially announced a comprehensive plan for institutional reforms through a national television address. The core content includes a thorough modification of the Central Bank’s charter and the introduction of a “government shutdown” mechanism similar to that in the United States. The goal is to cut off the government’s reliance on printing money to fill fiscal deficits in the long term, and solidify the achievements in combating inflation.
According to Milei’s proposed amendment to the Central Bank’s charter (Carta Orgánica del BCRA), the Argentine Central Bank will be strictly prohibited from directly or indirectly financing the Ministry of Finance, provinces, or municipalities, including not being able to purchase national debt in the primary market. Its sole core mission will return to “maintaining the value of the currency” without undertaking multiple goals (such as promoting employment or economic development).
The bill also strengthens the independence of the Central Bank’s top management: in the future, to dismiss the President of the Central Bank or board members, a two-thirds majority consent from both the Senate and the Chamber of Deputies will be required, far higher than the current standard. These reforms are built upon Milei’s 2023 election promise to “curb inflation,” moving Argentina closer to international best practices – central banks should operate independently from elected governments.
Milei criticized in his speech that politicians in the past have sacrificed the interests of the people by continuously printing money for political purposes. He stated: “We have decided to end this 91-year history (the Central Bank was established in 1935), thoroughly reform the Central Bank’s charter, and put an end to the deception of printing money to feed politicians.” He emphasized that the most apparent side effect of this practice is inflation, essentially forming an unauthorized “inflation tax” on the populace, reducing their purchasing power.
Since Milei took office at the end of 2023 and initiated fiscal tightening measures, Argentina’s annual inflation rate has drastically dropped from around 211% in 2023 to approximately 33% currently.
To prevent government overspending, Milei also introduced a permanent fiscal balance rule called “grillete fiscal” (fiscal shackle). If the government runs a fiscal deficit for consecutive months, the Congress will have several weeks to restore the balance; if unsuccessful, a mechanism similar to the “government shutdown” in the US will automatically kick in.
During this period, non-essential federal activities will be suspended, new expenditures frozen, no new public positions can be created, and no new contracts signed. The President, Vice President, Congress members, ministers, deputy ministers, and other officials will not receive salaries during the shutdown. However, essential services directly related to the public like pensions, welfare, healthcare, national security, defense, and the prison system will not be affected.
Furthermore, the reform plan also includes related changes in the capital and insurance markets as part of overall economic liberalization. Milei concluded that these measures will end nearly a century of fiscal imbalance and high inflation cycles in Argentina, laying a more solid institutional foundation for the economy, “we will ultimately make Argentina great again.”
These reform bills still need formal approval from Congress. Milei’s ruling coalition does not hold a majority in both the Senate and the Chamber of Deputies, requiring them to garner support from opposition parties or allies to pass.
Analysts point out that as the Central Bank’s charter and fiscal rules are general laws rather than at a constitutional level, future governments or forces controlling the majority in Congress may still modify or overturn these regulations, posing risks to policy continuity. Currently, the markets and international institutions (including the International Monetary Fund) generally support the direction of strengthening the independence of the Central Bank, but the actual legislative outcomes are still subject to observation.