After winning the second round of the Argentine presidential election with 55.7% of the vote, he couldn’t sleep all night. With his voice still hoarse, on the morning of Monday November 20th, the ultra-liberal Javier Milei increased his interviews with the main radio stations in the country to clarify some of his measures and sometimes their timing.
Everyone hoped that he would reveal the name of the economy minister, a crucial position in terms of his program. It did not happen. Javier Milei, secluded in a city center hotel that serves as his headquarters, received his relatives and allies, including former President Mauricio Macri (center right, 2015-2019). An expected meeting with outgoing President Alberto Fernandez had still not taken place as of Monday evening.
That day was a holiday in Argentina and the banks were closed. The city seemed to have sunk into a state of paralysis following the previous day’s boiling. Financial markets abroad reacted with jubilation to the announcement of the election of the ultra-liberal candidate. Shares of some Argentine companies on Wall Street rose 40%.
Pledge to end inflation
The economic situation is anything but easy. In ten years no less than Nine economic ministers and six central bank presidents have lost their teeth. Javier Milei was elected on a promise to put an end to inflation (143% in a year), assuring that it would take between a year and a half and two years to “destroy” it. The two most important levers to achieve this are strict fiscal discipline and the replacement of the national currency, the peso, with the dollar. A measure that Guido Zack, director of the economic department of the Fundar think tank, considers “all the more inapplicable since American foreign reserves are now negative.” To “dollarize,” he estimates, Argentina would need to borrow at least $40 billion (36.5 billion euros) while still indebted to the International Monetary Fund.
Consequence of this last measure: the abolition of the Central Bank, which, according to Javier Milei, is responsible for inflation due to excessive money issuance. He announced that its closure was a “moral directive.” “That’s a crazy idea,” says Mr. Zack, who recalls: “The only country that has done that is Micronesia.” The other “dollarized” countries like El Salvador or Ecuador have retained their central bank, not to mention the European countries that have introduced the euro. »
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