Argentina's New Leader Doubles Down on Vow to Shut Down Central Bank
Argentine President-elect Javier Milei says one piece of his dramatic campaign will take place, even as he names moderates to key posts in his administration.
On Friday, the Libertarian populist issued a statement saying that closing the central bank of Argentina was a “non-negotiable matter” and that citizens should ignore “false rumors” to the contrary, according to Reuters.
But while that radical pledge appears on track, Milei is filling his Cabinet with moderates.
Instead of a close ally, Milei has named economist Osvaldo Giordano to lead Argentina’s social security administration, which is likely to be a centerpiece of Milei’s call for spending cuts.
Milei had called for dollarization of the economy.
However, Emilio Ocampo, an advocate of dollarization who was part of Milei’s campaign, is no longer part of Milei’s team, even though Milei had said during the campaign Ocampo would lead Argentina’s central bank, according to Bloomberg.
In October, Miei said the Argentine peso was worth “less than excrement” and “blowing up” the central bank was necessary.
Milei said in a Wednesday interview that although he liked Ocampo’s plan, “we need to see whether the market situation allows a solution like the one Emilio proposes, and whether he is prepared to implement a plan which is not the one he had originally planned,” according to the Financial Times.
Ocampo rejected leading the central bank, the Financial Times reported, citing a source it did not name
“The only reason for Ocampo to be at the [central bank] was to dollarize. He was never going to the central bank to implement someone else’s plan, which he doesn’t agree with,” the source said.
Bloomberg said Milei named two former Wall Street veterans to lead his economic team — Luis Caputo and Demian Reidel. Both had been part of Argentina’s government from 2015 to 2019.
Some experts had said the idea of dollarization was at variance with Argentina’s reality, according to The New York Times.
“Dollarizing won’t be possible, at least immediately,” Santiago Bulat, an Argentine economist, said, adding that nations such as Ecuador that tried it found that dollarization was not a magic bullet for the economy.
“Ecuador dollarized, yes, in a very critical situation. But now they depend on the United States’ monetary policies. They defaulted twice in 20 years,” he said.
Caputo said, though, that change is coming, according to Reuters.
“Our approach is fiscal and monetary shock from day one. The roadmap is orthodox and without crazy things,” Caputo told a meeting of bankers, Reuters said it was told by a banking source it did not name.
Argentina’s economy is currently battling annual inflation estimated at 150 percent.
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