Milei vows to axe capital controls and negotiate Trump trade deal

Argentine President Javier Milei promised to lift capital and currency controls next year while his administration intends to negotiate a free-trade agreement with the US once Donald Trump takes office.

International investors are keenly waiting for Milei to dismantle the scaffolding of controls he inherited a year ago that have discouraged foreign funds from putting money in the country despite one of the best bond rallies in emerging markets. 

The narrowing gap between Argentina’s parallel and official exchange rates has nearly disappeared in recent weeks, which helps move the government closer to the lifting of controls. To fix the Central Bank’s stockpile of debt, Argentina will either enter a new programme with the International Monetary Fund to replace its current US$44-billion deal or an agreement with private investors, Milei announced.

“This brings us a little closer each day to the definitive exit of capital controls, an aberration that never should have happened, and that with us, will end next year and forever,” Milei, flanked by Cabinet members, said in a nationally televised address Tuesday to mark his first year in office.

To continue advancing toward what Milei calls a “competition of currencies,” Argentines from now on will be allowed to pay, sell and earn in any currency they desire, Milei said, while taxes will continue to be paid in pesos. Earlier Tuesday, the libertarian president said it would take four years to shutter the central bank, which was one of his top campaign pledges. 

Milei promised the economy would grow “fiercely” as a result of exiting capital controls, cutting taxes and eliminating red tape. He assured fiscal austerity, the anchor of his economic plan, is here to stay, even in the face of midterm elections next year. He also predicted productivity would increase in every sector of the economy after a sharp recession this year. 

Milei also said Argentina had received and approved investments representing more than US$11.8 billion in the infrastructure, mining, auto and energy sectors. Milei added his economic team is devising a plan to eliminate more than 90 percent of taxes. 

“We are entering a year of low inflation, high economic growth and as a result, sustained growth in Argentines’ purchasing power,” Milei said. “Like it or not, Argentina has gotten out of the hole politicians sunk us into. Today, for the first time in decades, the sun of hope peeks through.”

Milei also committed to negotiating a free-trade agreement with the Trump administration and pledged to make Argentina more independent from Mercosur, the South American trade bloc he dubbed a “prison” last week after it reached a deal in principle with the European Union.  

“Our ultimate objective in Mercosur is to increase the autonomy of the bloc’s members toward the rest of the world,” Milei said. “In that spirit, our first objective will be to kickstart next year a free-trade agreement with the United States.”