Published by Global Banking and Finance Review
Posted on January 29, 2025
By Lucinda Elliott
BUENOS AIRES (Reuters) - Argentina's deregulation tsar Federico Sturzenegger, after a year spearheading one of the world's most aggressive attacks on the public sector and red tape, plans even deeper cuts this year, with sights set on industries from autos to medicines.
Sturzenegger heads the Ministry of Deregulation and State Transformation, created last year and a possible inspiration for Elon Musk's new U.S. government efficiency body DOGE. In an interview with Reuters, he said Argentina needed to look for every peso it could cut from state spending.
"Our objective is fiscal balance, non-negotiable, executed via a reduction in spending," he said from his office in Buenos Aires, citing President Javier Milei's "chainsaw" - which he has literally wielded to illustrate his cutbacks to the state.
"In 2025 we have to continue with the chainsaw... because we want to get the state out of the way," he said. "We're entering now what is called deep chainsaw, or chainsaw 2.0."
The comments will come as music to the ears of investors in Argentina, who have been riding a wave of market optimism since Milei took office at the end of 2023, ushering in tough austerity and cost-cutting to overturn a deep fiscal deficit.
The serial-defaulting nation posted a budget surplus for the first time in 14 years in Milei's first full year at the helm, while bonds and equities rocketed as his government rolled out business-friendly policies and rebuilt depleted reserves.
Sturzenegger said the deregulation push would target sectors where local prices were artificially high due to a lack of competition. The government this week lowered taxes on car imports and will look to cut regulation for electric cars and charging stations as early as this week, he added.
"We're dismantling this regulation entirely," he said.
MUSK, MELONI, IMF
Argentina has become a rare real-life test case of libertarian free-market economics and deregulation, drawing attention globally, including from Trump's new U.S. administration, Musk and Italy's Prime Minister Giorgia Meloni.
"There's a lot of curiosity over what we are doing," said Sturzenegger, who earlier this month was invited by the International Monetary Fund to join an advisory board on deregulation.
Argentina is the IMF's largest debtor nation, with a $44 billion loan program. It is in talks over a new deal.
Tesla magnate Musk, who has been charged by U.S. President Donald Trump with running a Department of Government Efficiency (DOGE) aimed at carrying out dramatic cuts, spoke frequently with Milei ahead of the U.S. election in November, Sturzenegger said.
Milei was one of a handful of foreign leaders to attend Trump's inauguration this month.
"I think Javier conveyed what we are doing to Musk, and I think that was how his ideas matured in some way," Sturzenegger said.
(Reporting by Lucinda Elliott in Buenos Aires. Editing by Adam Jourdan and Rosalba O'Brien)
