MercoPress. South Atlantic News Agency

Argentina getting ready to dollarize its economy, minister says

Argentina still needs to terminate the “stocks” holding the parity between the local peso and the US dollar, Caputo explained

Argentine Economy Minister Luis 'Toto' Caputo said Wednesday that the Libertarian administration of President Javier Milei had that the Government has “everything ready for dollarization.” The “recovery is very close,” he added as the “blue” (a euphemism for “black market”) dollar bounced back after it became evident that the government would be unable to deliver on Milei's promise to have an agreement signed with the provincial governors by May 25.

In this scenario, Caputo insisted that Argentina needed to get out of the currency exchange “stocks” holding the parity between the Argentina peso and the US dollar, which reached AR$ 1,100 / US$ 1, its highest level since Feb. 21 for a 24% gap from the official quotation.

In Buenos Aires financial circles it is also believed that the recent increase stemmed from the Central Bank's (BCRA) decision to lower the basic interest rate to 40%.

“We have everything prepared for dollarization. It is very well studied,” stressed Caputo. “We are doing what we said we were going to do and what we said was going to happen is happening,” he went on while celebrating April's 8.8% monthly inflation, which proved the government was “on the right path.”

“The important thing about lowering inflation is to start reactivating credit. Without credit a country does not work,” Caputo also noted. “We went from a situation of hyperinflation to 20 and 30-year mortgage loans in five months,” he underlined in a TV interview.

Regarding the government's so-called Omnibus Law bill currently under senatorial debate, Caputo said he was “very optimmistic” it would be passed, although a delay in this regard has resulted in little hopes of signing the “May Pact” with which Milei had bought his administration some time as an increasing number of Argentines are having difficulties making ends meet.

Caputo also said that potential foreign Foreign investors were “amazed by the speed of the changes and the President is a pole of attraction because of his ideas.”

The minister also pointed out that the government “does not control prices, it controls behavior” which “works in all countries.”