The Argentine government's push to substantially deregulate the economy and strengthen competition in the private sector will face significant challenges in the short term, but even if only a part of the reforms is implemented, the result will be a more attractive business environment in South America's second-largest economy. On Dec. 20, Argentine president Javier Milei announced an emergency decree with more than 300 measures to deregulate the economy. The decree removes regulations in the housing rental market, eliminates price controls for goods and services and changes the legal status of state-owned companies (with the aim of eventual privatization). It also simplifies export procedures, extends the work trial period for new employees from three to eight months, lowers the costs for companies to lay off workers and removes protections and preferences for Argentine companies over their foreign competitors. Finally, the decree also removes regulations for the airline, healthcare, pharmaceuticals, satellite internet services and tourism sectors to promote competition and the entry of new companies in those markets. 

• Hours before Milei's announcement, several left-wing groups took to the streets of Buenos Aires to protest against the new government. While there were some isolated clashes between protesters and police forces, the demonstration was mostly uneventful. Shortly after Milei's announcement, small groups protested the deregulation plans in Buenos Aires and other cities while others banged pots and pans on their balconies across the country to express their discontent. Several union leaders have said they will go on strike to protest the labor reforms, though no specific announcements have been made.

The decree is part of Milei's presidential campaign promise to heavily deregulate the Argentine economy and promote competition. Milei was sworn in as president on Dec. 10, after promising to reduce public spending, taper off inflation (which reached 148% year-on-year in November) and drastically deregulate the Argentine economy to allow for greater competition and a stronger presence of the private sector in the economy. On Dec. 12, Economy Minister Luis Caputo announced cuts to subsidies for electricity, natural gas and public transportation, as well as a reduction in the number of ministries and secretaries in the Argentine state and a devaluation of the Argentine peso by more than 50%. These measures were designed to reduce Argentina's fiscal deficit to zero by the end of 2024 (from roughly 4% currently) and end years of expansionary monetary policies, which, according to the Milei administration, are the main reason behind the country's high inflation. In the meantime, Milei's decree is primarily aimed at substantially deregulating the Argentine economy and opening the door to more competition in several previously heavily protected sectors.

• Argentina ranked 126 out of 190 countries in the World Bank's 2020 Ease of Doing Business Index. Some of the main problems with doing business in Argentina include high levels of bureaucracy and red tape, high taxes, complex regulations for cross-border trade and labor laws that result in considerable costs for companies that hire and lay off workers. 

Milei's reforms will face legislative and legal challenges, but even if some of them are approved, they will improve Argentina's business climate and create new opportunities for domestic and foreign companies. The Argentine government published the decree in the Official Bulletin on Dec. 21, which means that it will remain in force unless the two chambers of Congress vote against it. The Argentine government must send it to Congress within the next ten working days for ratification. After the decree reaches Congress, a bicameral commission will have ten working days to decide whether the decree is valid or not. After that, the two chambers of Congress will have to debate and vote on it (for which there are no deadlines). Only one chamber needs to approve the decree for it to be enacted, and Congress will have the power to approve or reject the decree as a whole but not to modify it, thereby easing the passage of Milei's decree. The problem for Milei, however, is that his party, Liberty Advances, and its allies lack a majority in either chamber of the Argentine congress, meaning that the decree may be abolished if the entire opposition bands together against it. Moreover, some of Milei's announcements require laws for their implementation, which Congress will need to pass separately. At the same time, some of the measures included in the decree may be unconstitutional, which opens the door for opposition parties to take the reforms to the Supreme Court (there are precedents for the Supreme Court abolishing decrees). This means that parts of the Dec. 20 announcement may not be implemented, while others may be declared unconstitutional. In the short term, measures such as the lifting of price controls are likely to result in price jumps that will further fuel inflation. However, in the mid- to long-term, even if only a fraction of the deregulation measures included in Milei's decree are implemented, increased competition and the elimination of protection for some economic activities will improve the business climate in Argentina, create opportunities for domestic and foreign private companies and eventually lead to lower prices for goods and services.