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In Argentina, Javier Milei’s narrow room for maneuver

He did not sleep all night after his victory in the second round of the Argentine presidential election, with 55.7% of the vote. His voice still hoarse, the ultra-liberal Javier Milei increased the number of interviews on Monday, November 20 in the morning on the country’s main radio stations, the opportunity to specify some of his measures and, sometimes, their timetable.

Everyone hoped that he would reveal the name of the Minister of the Economy, a crucial position with regard to his program. It has not happened. Javier Milei, secluded in a hotel in the city center which serves as his headquarters, received his relatives and allies, such as former president Mauricio Macri (center right, 2015-2019). An expected meeting with the outgoing president, Alberto Fernandez, had still not taken place as of Monday evening.

That day was a public holiday in Argentina and the banks were closed. The city seemed plunged into a state of torpor after the boiling of the day before. Abroad, financial markets reacted with jubilation to the announcement of the election of the ultraliberal candidate. The shares of certain Argentine companies on Wall Street jumped 40%.

Promise to end inflation

The economic situation is anything but simple. In ten years, no less than nine economy ministers and six presidents of the central bank have lost their teeth. Elected on the promise of putting an end to inflation (143% over one year), Javier Milei assured that it would take between a year and a half and two years for the ” destroy “. Its two main levers to achieve this are zealous fiscal discipline and the replacement of the national currency, the peso, with the dollar. A measure that Guido Zack, director of the economics section of the Fundar think tank, believes “all the more inapplicable that American currency reserves are negative today. For “dollarize”he estimates, Argentina should obtain a loan of at least 40 billion dollars (36.5 billion euros), while it owes even more to the International Monetary Fund.

Corollary of this last measure: the abolition of the central bank, responsible, according to Javier Milei, for inflation, due to excessive monetary emission. Its closure is a matter of “moral instruction”he proclaimed. “This is a crazy idea,” believes Mr. Zack, who recalls: “The only country that has done this is Micronesia. The other countries to have “dollarized”, such as El Salvador or Ecuador, have retained their central bank, not to mention the European countries which have adopted the euro. »

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