Argentine President Javier Milei said on Thursday evening that he will present a bill to Congress to punish with jail time any Central Bank official that issues money to the National Treasury to finance fiscal deficits.
Milei, in an interview with the news channel Todo Noticias, said that the intention is to define the practice of printing money — known as seigniorage — as a criminal offense.
“The bill will define seigniorage as a criminal offense and in case the Central Bank finances the treasury, either directly or indirectly, the president of the Central Bank, the board of directors, the president of the Nation and the officials who vote for it would end up in jail,” Milei said.
The objective, Milei said, is “not to be able to issue money to finance the Treasury,” pointing out the previous administration of former socialist President Alberto Fernández that, during his disastrous four-year presidency, printed the equivalent of 18 percent of Argentina’s GDP in pesos.
The bill is part of Milei’s “shock therapy” plan to restore Argentina’s economy after nearly two decades of socialist rule left the South American country with a record inflation rate and on the verge of entering a hyperinflation spiral.
The legislation would help to reduce public spending to such an extent that the national government will be able to pay for its operations with its resources, without the need to resort to the issuance of money by the Central Bank of Argentina.
“We have a strong commitment in the fiscal area, zero deficit is not negotiable,” Milei said. “If you have zero deficit, you do not take on more debt. By not taking on more debt, the debt – product ratio becomes constant or decreasing and the counterpart of that is that you become more solvent.”
Milei said the bill to penalize seigniorage will be sent to Congress in the short term, but did not give a specific date.
“We are going to send it when we are in conditions to open the market, when we finish cleaning up the Central Bank and set up the currency competition base with the peso,” he said.
The Argentine president said during the interview that he mentioned the bill to the deputy managing director of the International Monetary Fund, Gita Gopinath, who he had just finished meeting with before the interview. Milei said that Gopinath was “pleasantly surprised.”
“I think she was surprised by my level of orthodoxy,” Milei told the interviewer. “The Fund committed to continue accompanying us, and that means endorsing a program.”
“If the program requires it, we would have to discuss it,” he continued. “The Fund’s position is to work alongside us, they are strongly committed to our success, they want us to succeed and they are willing to support us. For them, it is an emblematic case.”
In Argentina, bills can be presented to Congress for debate by the nation’s deputies, senators, president, and citizens, which allowed Milei to present a massive omnibus bill package to Congress in December that contains the majority of his planned sweeping reforms to the Argentine state.
The omnibus bill, after being approved by the lower house in February, was sent back to committee after being rejected on an article-by-article vote earlier some days after its approval.
Christian K. Caruzo is a Venezuelan writer and documents life under socialism. You can follow him on Twitter here.
