Before reaching the Casa Rosada, Javier Milei ran a presidential campaign that put a series of economic promises at the fore: as well as tackling inflation, he vowed to introduce dollarisation, close Argentina’s Central Bank and remove currency controls.
He has failed to implement many of those promises his first year in office, though inflation is more under control, falling from 25.5 percent last January to just three percent last month.
Dollarisation was one of the most common words in Milei's campaign speeches on his way to Balcarce 50, although after his victory, the issue was spoken of less and less.
Eliminating all pesos and moving to a dollarised economy was the central proposal of La Libertad Avanza (LLA) in the 2023 election campaign, hand-in-hand with the elimination of Argentina’s Central Bank – Milei’s oft-stated vow.
Before taking office, there was talk of economist Emilio Ocampo being named as the Central Bank’s governor with the sole objective of eliminating it.
That did not happen. Ocampo distanced himself from proceedings and Milei ended up choosing Luis Caputo as economy minister and Santiago Bausili as head of the BCRA.
“As endogenous dollarisation progresses, there will come a time when there will be a very large dollar operation, and a very small peso operation, and when this situation arises, we will be in a position to close the Central Bank,” said the president last October.
Asked about the idea of closing the Central Bank in Madrid during the presentation of his latest book, the President said: “It is absolutely still on the table.”
Another of the unresolved issues is the so-called ‘cepo,’ Argentina's strict web of currency controls. Bausili has said in recent weeks that it is necessary to reach a “monetary equilibrium” before removing currency controls.
“We are very close to achieving it, but not necessarily to exchange rate equilibrium. For now, the ‘cepo’ acts as a barrier to the inflow of dollars, rather than to their outflow,” considered the head of the Central Bank.
Meanwhile, the last time Milei referred to the issue, he stressed: “By reaching a monthly IPC [consumer price index] of 2.5 percent, the cepo could be eliminated. The crawling peg is at two percent plus international inflation, which implies an induced inflation of 2.5 percent. If I reach that level, all inflation will be induced, which will allow me to lift the restrictions.”
– TIMES/NA
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