Dollarization of Argentina's economy was one of the country's president's campaign promises
Argentine President Javier Milei said on Thursday (January 11, 2024) that he would implement one of his campaign proposals: closing the central bank. According to him, the country is facing “a process of price transformation” and therefore there will be “a period of inflation with terrible figures”.
The statements were made on La Red radio. At the end of the interview, the journalist asked whether Milei intended to dollarize the Argentine economy, and the Argentine president replied: “Sooner or later I will close the central bank.”
Data released on Thursday (January 11) suggests Argentina ended 2023 with annual inflation of 211.4%. The rate recorded in December was 50.5 percentage points higher than the previous month. Here is the full text (PDF 2.5 MB) of the Indec (National Institute of Statistics and Census) report in Spanish.
Milei said he was “ready to privatize Banco Nación and all stateowned companies.” According to him, “people are aware of the disaster” that his government has inherited and “they know that they will have to go through a difficult period to overcome it”.
He stated that his government had conducted “the fastest negotiations in history” with the IMF (International Monetary Fund). “We have implemented a much deeper adjustment plan than the one required by the IMF,” he said.
The agreement reached on Wednesday (January 10) between Argentina and the IMF will allow the release of $4.7 billion. In return, the country's government committed to converting the primary deficit into a surplus and increasing liquidity reserves. Here you can find the full joint communication from the Fund and the Argentine government on the agreement in English (PDF 395 kB).
BRAZIL
Asked about the situation with Brazil, Milei explained that trade relations between the two countries are “mature” and “continue as before.”
President Luiz Inácio Lula da Silva (PT) supported the election of the Peronist candidate Sergio Massa, who ran against Milei in the second round of the Argentine elections. During his election campaign, Milei called the PT member a “communist” and “corrupt.” He also accused Lula of interfering in the Argentine election campaign and financing part of it. He then lowered his tone, invited the Brazilian president and said he would be well received if he went to the inauguration. In this scenario, Lula decided to send Chancellor Mauro Vieira to Milei's inauguration.