President Javier Milei is optimistic that he can keep his pledge to the International Monetary Fund (IMF) and lift capital controls before the end of the year while postponing his desire to dollarise the economy.
The Casa Rosada assures that the ideal would be to eliminate the so-called ‘cepo’ – the word used by Argentines to refer to currency restrictions – in April or May. The ultimate deadline would be June.
“Now the next step is to eliminate capital controls by June at the latest, such is the conviction and plan of the President,” a Casa Rosada office source said, while at the same time warning that a series of conditions must be met in order to reach this target.
The scenario anxiously sought by the government is that once prices have found their level, after the summer is over, structural changes will be applied to the economy, making it possible to bring down inflation in the following months.
What would permit exchange controls to be eliminated before the end of the year would be the entry of some US$30 billion corresponding to farm exports. Following the scourge of the 2023 drought, the agricultural situation is expected to become more regular and supply the corresponding hard currency.
Another key factor is the recovery of Central Bank reserves, which thus far in this Presidency have rose nearly US$6.4 billion, with government sources forecasting that it will be “at least double that" in March.
“The cepo [capital controls] was created to attenuate economic crises. No country in the world applies this restriction,” the sources added.
Since taking office, the Javier Milei administration has devalued the peso to the tune of 118.3 percent, taking the official exchange rate to 800 pesos with a monthly slippage of two percent. This variation will continue, probably into March, so that when the controls are lifted, the dollar is expected to reach 1,000 pesos, an intermediate level between the current official and the blue parallel exchange rates.
This forms one of the libertarian administration’s commitments to the IMF, published in recent days in the multilateral lender’s staff report.
Dollarsing the economy will also wait. "The issue of dollarisation is not on the IMF agenda,” assured President Milei in a recent interview about his upcoming trip to Israel and Italy. Quizzed as to whether he is evaluating implementing it this year, he said "the time is not right."