Will shut central bank, dollarise economy, says Argentina's Milei

Argentina’s leading presidential candidate Javier Milei pledged to close the nation’s central bank while saying he would make every effort to avoid a default on the country’s sovereign debt if he wins the October vote. 
 

Milei, a radical libertarian whose surprise win in Sunday’s primary vote roiled markets, told Bloomberg News his bold fiscal adjustment will boost Argentina’s reputation and credit profile, making a default unnecessary. 
 

His plan includes slashing spending by at least 13 per cent  of gross domestic product before mid-2025 by dramatically downsizing public works, reducing the number of ministries, removing subsidies and capital restrictions that would allow businesses to transact in US dollars. More drastically, he also plans to shutter the central bank — which he said has “no reason to exist” — and dollarise the $640 billion economy. 
 

“I will make every effort to avoid a default, obviously,” Milei said in a two-hour-long interview in Buenos Aires Wednesday. 

Argentina’s assets sold off after Milei, an outsider few investors saw as a serious contender until now, came out ahead in the primary, seen as a barometer for presidential elections in a country where polls are notoriously unreliable. The slump forced the government to devalue its tightly controlled official exchange rate by 18 per cent  when markets opened Monday.

The country’s bonds were mixed on Wednesday after the interview. Securities due 2030 edged 0.2 cent lower to 31.4 cents on the dollar for their fourth day of losses, while bonds due in 2046 edged up. The peso sank as much as 4 per cent in parallel markets to around 710 pesos per dollar, a record low.
 

In the first interview to foreign media after his unexpected win, Milei detailed his plan to scrap the Argentine peso for the US dollar as a way to bring down inflation that’s running at 113 per cent.