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ECONOMY | 11-01-2024 15:16

Milei vows to shutter Argentina’s Central Bank ‘sooner or later’

President Javier Milei vows Argentina's Central Bank will be shut down "sooner rather than later" and that dollarisation isn't off the table.

President Javier Milei, who has won praise for his pragmatism since taking office, is standing by one of his most controversial campaign pledges: closing Argentina’s Central Bank.

The 86-year-old institution will be shut down “sooner or later,” Milei told Radio La Red on Thursday, when asked if he still planned to dollarise the economy. 

Milei also predicted that December’s monthly inflation figure, due at 4pm local time, will be below 30 percent — and closer to 25 percent — “which will show a resounding success” of his economic team, given expectations were at one point as high as 45 percent. 

The annual inflation rate is nonetheless on track to surge past 200 percent, vaulting Argentina ahead of socialist-run Venezuela as the country with the fastest consumer price gains in Latin America.

Doubts about Milei’s commitment to shutting down the Central Bank grew as he dialled back his rhetoric after winning November’s run-off vote. The libertarian outsider’s decision to abandon some of his more strident advisers for members of former president Mauricio Macri’s team was also seen as a signal he would moderate his ambitions.

After the new government took power in December, Economy Minister Luis Caputo told LN+ TV that the “rallying flags” of dollarisation and closing the Central Bank “haven’t been set aside.” But Santiago Bausili, Milei’s choice to lead the monetary authority and Caputo’s former business partner, also said at the time the institution wouldn’t be shuttered while he’s at the helm.

There are currently only about a dozen countries that operate without a Central Bank. The list includes Panama, Kiribati, Tuvalu, Micronesia, Andorra, Marshall Islands, Monaco, Nauru and Palau. Most of them have small populations and some are considered tax havens.

Milei also used his radio interview to flag that Argentina has received 60 requests for bilateral meetings at the upcoming World Economic Forum in Davos, Switzerland. He said he’s confident he’ll secure the necessary congressional support to pass the sweeping package of reforms he recently sent to lawmakers. And he praised the new staff-level agreement reached Wednesday with the International Monetary Fund.

“It was the fastest negotiation with the IMF in history,” the president said.

by Ignacio Olivera Doll, Bloomberg

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