Argentina needs new laws to guarantee certainty for infra projects, says ex-cenbank head

Right-wing libertarian candidate Javier Milei wants to attract private investors to Argentina’s infrastructure sector if he wins this month’s presidential runoff but to do so he would need congress’ backing to pass laws that guarantee legal and macroeconomic certainty, according to former central bank head Martín Redrado.

“Infrastructure works can be executed by providing the right macroeconomic and currency access conditions to the private sector, with stability over time,” Redrado said in response to a question from BNamericas during a webinar.

One of Milei’s main economic proposals is to leave infrastructure planning and development mainly in the hands of the private sector, citing corruption scandals and a poor record of projects carried out by the public sector.

Redrado said that allowing exporters to leave 30% of their profits abroad would go a long way to lowering country risk.

“But that has to be in a law, and a law passed by a majority in congress, so regardless of whoever comes in 2027 [in the next presidential election] there won’t be a reversal,” he added.

The former central bank head was speaking during the webinar hosted by Clapes UC, the Latin American economic and social policy center of Chile’s Universidad Católica. 

In the October 22 general elections, Milei’s Libertad Avanza party won 37 seats in the lower chamber and seven in the senate, which will make it the third largest block in congress but well behind the ruling Peronist Unión por la Patria coalition and the center-right Juntos por el Cambio alliance. However, no group will have a majority in either chamber so some horse-trading will be necessary. Unión por la Patria will be the biggest single group in both the senate and lower house.

After the first round, Milei, whose opponent on November 19 will be current economy minister Sergio Massa, secured the support of Juntos por el Cambio presidential candidate Patricia Bullrich, who ended up third in the October vote. However, that caused a rift between the coalition’s two main parties, Bullrich’s Propuesta Republicana and Unión Cívica Radical, with some members of the latter calling to vote for Massa in the runoff.

The new legislature will be sworn in on December 10, along with Argentina’s next president. Milei is leading Massa slightly in most polls, although in the first round and the primaries the pollsters failed to predict the outcome.