The President of the Argentine Republic Javier Milei speaks for the first time to all Argentines from the balcony of the Casa Rosada. December 10, 2023. Photo courtesy of the Office of the President of Argentina.
In a wide-ranging interview with Bloomberg’s News Editor-in-Chief, John Micklethwait, Argentina’s President Javier Milei explained that his plan to dollarize the country’s economy has been thwarted by dishonest politicians. Micklethwait discussed dollarization and many other topics with Melei, writing:
After just over 100 days in office, the libertarian leader discussed his fiscal and monetary plans, his approach to one of his country’s biggest trading partners and creditors, and much more.
Pushing Back on Quicker Peso Devaluation
Milei conceded he is adjusting his ambitious agenda to account for Argentina’s political and economic reality.
Consumer subsidies that make a subway ride cost pennies will take as long as three years to be removed, crippling currency controls will only be lifted after a clean-up of the central bank’s balance sheet, and dollarization has been thwarted by Argentina’s “dishonest” politicians, he said at the presidential palace.
“We have to separate short-term problems from long-term problems,” Milei argued. “We said the situation was complicated and required very strong medicine in the short term. We will have suffering and then we will get out of it.”
He deflected repeated questions about a specific timeline for floating the currency and denied any plans to accelerate the peso’s gradual depreciation, known as the crawling peg.
“No, it makes no sense,” he said. “Why should I make the exchange rate jump today if the depreciation matches the rate? It is stupid. The exchange rate is in line with the market.”
His administration currently devalues the currency at a 2%-per-month pace, a policy set after Milei’s December inauguration together with a one-off 54% devaluation. The president’s comments defy market an economist expectations that the crawling peg would be sped up as soon as this month.
Given that “Argentina is an economy that’s very decapitalized after 20 years of savage populism,” Milei expects to be able to generate growth in short order. And he said the public is willing to tolerate his government’s shock therapy because they see light at the end of the tunnel.
“When you look for the word that reflects the sentiment of Argentines, do you know what it is? Hope,” he said. “Even though we are making the biggest fiscal adjustment in history, my popularity is increasing because the people know that I’m telling the truth.”Read more: Milei Sees Long Slog Ahead to Bring Argentina Reforms He Pledged
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