Sunday, May 26, 2024

ECONOMY | 15-05-2024 16:31

President Milei attacks ‘loudmouth’ critics as he denies peso-dollar lag

President attacks "loudmouth" economists critical of his exchange rate policy, defends economic programme and says Argentina is "very close" to removing currency controls.

President Javier Milei hailed his government in a keynote speech on Wednesday, insisting he is winning the fight against inflation and defending its severe public spending cutbacks. 

Milei, 53, said at an event hosted by the Inter-American Council for Trade and Production (CICyP) that Argentina is “very close to lifting” foreign exchange controls and that dollarisation of the economy remains a target.

In his typically combative style, the La Libertad Avanza leader slammed fellow economists who questioned his stabilisation plan, dismissing them as inaccurate. 

"If there is no stabilisation plan, do you think inflation will go down by chance? It's really insulting," the President told business leaders. 

The remark came a day after Argentina’s government announced that inflation reached 8.8 percent in April, the first single-digit inflation figure since October 2023. 

Consumer prices have risen almost 290 percent year-on-year.

Since taking office last December, Milei has slashed public spending, downsizing the Cabinet, eliminating government agencies, halting public works projects and laying off thousands of public employees. 

"We have made the biggest fiscal adjustment in the history of humanity," Milei said Wednesday. 

Moves to eliminate subsidies for utilities, remove price controls and a sharp devaluation of the peso have hit the pockets of Argentine hard. Around half of the population is not considered poor, according to several studies. 

Many economists in Argentina have argued that the nation’s currency should be further devalued, noting alleged "exchange rate backwardness" - i.e. an appreciation of the peso against the dollar. Among them is Domingo Cavallo, whom Milei once called "the best economist in Argentine history.”

However, the President assured that "there is no exchange rate lag" and said that "the dollar is fine." Economists who dispute this assertion are making the wrong analysis, he argued., accusing them of “fatal arrogance.” 

“Even though I’m here in my capacity as President, given the intensity of the debate over a foreign exchange lag, I’m still an economist. So I find it relevant to have this debate because from my point of view, except for rare exceptions, what most analysts are saying is wrong,” said the head of state.

"Trying to correct the exchange rate by devaluing the dollar only increases the number of poor and destitute people and does not solve the problem,” he argued. 

“They are claiming to know things they don’t have the faintest idea about,” the President complained at the event staged at the Alvear Hotel, branding his critics “loudmouths” who make “cheap analyses.”

The far-right leader accused critical economists of “intellectual dishonesty” and denounced them for “wanting things to go wrong.”

Milei, who admitted he was “a bit more aggressive than usual,” also referred to the so-called ‘cepo,’ strict restrictions on the purchase of foreign currency that have been in place since 2019. 

"We are going to open the cepo, it is in our plans to do so as quickly as possible,” said the President. 

"One of the things that the IMF [International Monetary Fund] praised the most is how every day we lift restrictions on the foreign exchange market," declared Milei.

Argentina has a US$44-billion loan with the multilateral lender and its debt restructuring plan involves regular reviews of public accounts.

In his speech, President Milei also mentioned two of his election campaign mantras: dollarisation and the elimination of the Central Bank. 

The La Libertad Avanza leader assured that "as the economy expands, the amount of pesos will be relatively smaller and then the economy can be dollarised and the Central Bank eliminated.” 

Much of Milei’s Cabinet were in attendance at the event in Buenos Aires, including presidential chief-of-staff Karina Milei, Interior Minister Guillermo Francos, Security Minister Patricia Bullrich, Foreign Minister Diana Mondino; Economy Minister Luis Caputo and Central Bank Governor Santiago Bausili.




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