By Ryan Dube

Argentina President Javier Milei's scaled-back package of reform measures designed to turn around an economy with the highest rate of inflation in the world won approval from in the lower-house of congress.

The reforms will allow some state-owned companies to be privatized and make it easier for businesses to hire workers. The approval was a rare legislative victory for Milei, a libertarian economist who took office in December.

While Milei has drastically cut public spending in order to rein in inflation that hit 288% in March, he's also struggled to win support in congress for his economic measures. A more ambitious package of economic reforms was withdrawn from congress in March by the government after it faced stiff opposition from lawmakers.

"This is the first fundamental step to remove Argentina from the swamp of the last few decades," Milei wrote on X on Tuesday.

The bill will now go to the Senate, where lawmakers had rejected a government decree in March. Milei's ruling party has less than 10% of the seats in the senate.

The reforms passed on Tuesday by the Chamber of Deputies includes the privatization of about 10 state-owned firms, including the airline company Aerolineas Argentina. The government had originally called for privatizing around 40 companies.

The bill also included a measure aimed at increasing flexibility in the labor market by expanding a test period for companies before they have to hire employees full time.

Milei took office amid the country's latest financial crisis. He inherited a central bank with virtually no foreign reserves and a large budget deficit that authorities papered over with by printing money to pay for public works projects, free university tuition, and energy subsidies.

He's celebrated his economic performance so far, pointing to the first quarterly budget surplus in over a decade and the stabilization of the peso currency. But poverty has also spiked, raising the risk that his government could face social unrest.


Write to Ryan Dube at ryan.dube@wsj.com


(END) Dow Jones Newswires

04-30-24 1857ET