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"On November 24th, Javier Milei, the newly elected president of Argentina, who had once advocated the benefits of Bitcoin, stated on Friday that closing the Central Bank is a ""non-negotiable issue,"" according to a statement from his office posted on the social media platform X. Despite the ""rumors that have spread,"" he did not mention economic dollarization.
These remarks were made in response to what he called ""false rumors,"" as the liberal economist worked to assemble his cabinet team ahead of taking office on December 10. There were indications that he was choosing a more moderate cabinet team than expected.
According to the Financial Times, Emilio Ocampo, an economic history professor and former investment banker, is a key advocate for Milei's team, advocating for the sale of Argentine pesos and a shift to the use of the U.S. dollar. As the recent author of a paper advocating dollarization, he has been drafting a blueprint for the plan to be implemented after Milei takes office on December 10.
During the election campaign, Milei stated that Ocampo would lead the Central Bank, with the mission of closing the bank. In September, he added that economic dollarization and closing the banks were non-negotiable.
In October, Milei mentioned in an interview that he would abolish the peso and ""blow up"" the Central Bank, which was the core of his bold plan to revitalize the Argentine economy, significantly reducing the peso, setting annual inflation targets to three digits, and restoring public finances.
The TV economist vowed to ""use a chainsaw on the nation"" to balance the budget and promised extensive privatization.
The Financial Times reported that Milei has not confirmed the replacement for the president of the Central Bank, but local media reports suggest that Demian Redl, who served as deputy president of the institution under then-President Mauricio Macri, is being considered.
Another key role, that of the Minister of Economy, remains unfilled. In a Wednesday interview, when discussing possible appointments to this position, Milei praised Luis Caputo, the former head of Latin American trading at JPMorgan in the 1990s and later employed by Deutsche Bank.
Caputo served as Minister of Finance for the center-right Macri administration from 2017 to 2018. Milei said Caputo is ""undoubtedly a person capable of handling this job"" and has the professional knowledge needed to address currency issues and provide financial market solutions.
Milei has not appointed Caputo to the position, and local news reports suggest that the former minister has not made a final decision on whether to accept the job.
As Milei finalizes key economic portfolios before taking office on December 10, there are increasing signs of pressure in the local financial markets.
The Central Bank is struggling to find buyers for peso-denominated short-term debt, issued to suck the local currency out of the system, indicating that its efforts to curb inflation are weakening in the face of market uncertainty.
On Thursday, the dollar traded at around 1,020 pesos on the black market, almost three times the official fixed rate of 364 pesos.
Additionally, according to the statement, considering Milei's commitment to cutting national spending and subsidies, the National Social Security Administration (ANSES) is also an important institution. It will be led by economist Osvaldo Giordano from the central region of Cordoba.
Milei faces significant obstacles in implementing more radical reform plans. The biggest challenge is dismantling the price and currency control network carefully created by the outgoing Peronist administration without triggering runaway inflation and economic collapse.
At the same time, achieving his advocated economic dollarization, closing the Central Bank, and privatizing state-owned enterprises such as YPF (national oil) will take a considerable amount of time if they can be realized.
Milei's Libertarian Alliance has very limited seats in Congress, and he does not have any governors. He must also consider the demands of more mainstream conservative groups, whose support was crucial in winning the election last week." |
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Post time 30-11-2023 21:20:45