Milei's credibility under fire after crypto crash and tender failure

Argentine President Javier Milei's efforts to present the country's economy as more stable after years of turmoil have taken two serious blows. 

First came last week's failure of a concession tender for Argentina's main waterway, which was followed by Milei's promotion of a cryptocurrency that subsequently collapsed, causing massive losses for investors.

Milei is now facing criminal investigations over his involvement with the $LIBRA cryptocurrency project, according to local media.

"The key question being debated is whether Milei was part of the scheme or not. Obviously, the best-case scenario for him would be that he wasn't. But even that presents a problem for him, both politically and economically. If it's determined that he was deceived, it would deal a serious blow to his credibility as an economist," Hernán Letcher, head of the Buenos Aires-based economic policy center CEPA, told BNamericas.

The president promoted the cryptocurrency on social media, claiming it would be used to support private entrepreneurship in Argentina. However, just hours later, he deleted his post and denied any involvement in the project.

By then, $LIBRA's value had dropped by 90%, wiping out US$4bn in market value after a surge following Milei's initial endorsement.

"President Javier Milei has decided to allow the anti-corruption office to intervene immediately to determine whether any member of the national government, including the president, engaged in improper conduct," Milei's office announced via social media.

While some in congress are discussing the possibility of impeachment, Letcher believes the president's biggest legal challenges will likely come from the courts, particularly if the case involves legal action beyond Argentina's borders.

Concession concerns

In the case of the waterway tender, which was suspended after Belgian firm Dredging International emerged as the sole bidder, allegations of irregularities had been circulating even before the bid opening date.

Dredging International had requested that the process be halted, arguing that the tender was designed to favor the current concessionaire, Jan De Nul. 

These concerns were echoed by Argentina's procurement authority, which issued a non-binding resolution highlighting problems in how the bidding documents had been drafted.

Following the cancellation of the tender, the government launched an investigation into the failed process while also questioning Dredging International for allegedly intimidating potential competitors.

The concession covered a 1,477km section of the Paraná-Paraguay waterway, with a 30-year operating period and expected average annual revenues of US$410mn.

This was also the first major concession tender under Milei's administration, which aims to expand private sector participation in infrastructure development and management.

However, concerns remain over whether private firms have sufficient access to financing to take part in these projects.

Despite this, the economy ministry issued a decree on Monday to begin the privatization of road operator Corredores Viales, paving the way for concession tenders covering 8,500km of federal highways.

These will be divided into 11 sections, though the ministry stated in a press release that the final distribution could still be adjusted.

According to the ministry, the new concession system will eliminate subsidies, generating an estimated US$6.1bn in public savings.