33.8% over 12 months. That is the inflation still weighing on Argentine pockets: a product that cost 1,000 pesos a year ago sold for about 1,338 pesos in July. In a bid to bring that number down for good, Argentina's Chamber of Deputies approved on Wednesday (26) President Javier Milei's bill to reform the Carta Orgánica, the charter that defines what the country's central bank can and cannot do.
The bill passed with 144 votes in favor and 9 abstentions. Sources differ on the votes against: the AFP news agency counted 109, while the Argentine news site Infobae reported 102. The bill now moves to the Senate, where the government lacks a majority.
The core of the reform is a ban on the central bank financing the Treasury by printing money. It outlaws the so-called adelantos transitorios (emergency cash advances the bank used to make to the government) and the direct purchase of public bonds in the primary market.
Understand: printing money to pay the government's bills is the classic shortcut that feeds inflation. With more pesos circulating than the economy produces, each note buys less, and a paycheck shrinks by the end of the month. That was the mechanism in full swing when Milei took office in December 2023, with annual inflation running in three digits, according to AFP.
What changes
The text also strips the central bank of goals added in 2012 under former president Cristina Kirchner, such as promoting employment and economic development "with social equity". Its declared mission becomes a single one: "to preserve the value of the currency". For economist Martín Kalos, interviewed by AFP, that means, in short, "trying to keep inflation from running too high".
Other provisions tighten the design. The bank's results must first cover accumulated losses and rebuild its capital, and removing its president will require a "serious cause" and two thirds of the votes in Congress. An article allowing international reserves to be used as collateral in debt operations passed with 138 votes despite opposition protests, according to Infobae.
Milei celebrated on X (formerly Twitter): "A fundamental step to eradicate inflation from the lives of decent Argentines", he wrote. Government lawmakers argue the reform reassures markets and helps lower the riesgo país, the extra interest investors charge to lend money to Argentina.
The Peronist opposition sees it differently. Deputy Agustín Rossi said the real goal is to keep the current central bank board running monetary policy "regardless of whether the government loses next year's election". Miguel Ángel Pichetto criticized the model's "rigidity" and said the central bank should be subordinated to the country's growth and development.
In the same session, deputies approved the so-called Fiscal Innocence Law 2, which complements a capital regularization program regulated in April and also depends on the Senate. Wednesday's victory relied on allied blocs such as PRO, the party of former president Mauricio Macri, and the centrist UCR.