Argentina's new president is dragging his feet after promising to use the US dollar more
- Dollarization is a final step in a series of broader financial reforms, Argentina's Javier Milei said an interview published by Cenital.
- First, the central bank's balance sheets will be reduced and the banking system will be reformed.
Argentine president Javier Milei indicated that it'll be a long way out before he presses to dollarize the country's economy.
In an interview published by Cenital, a local website, the libertarian leader noted that dollarization is the final step in a longer list of reforms. Ahead of it, his government will work to clear up the central bank's balance sheets through June, before implementing changes to the banking system.
Institutions will then be able to pay the central bank in any tender, Milei outlined, with the dollar likely being the easiest to use. This "free competition of currency" is how he defined dollarization.
The banking system could be reformed within a year, he said.
It's a step away from putting the greenback front-and-center, as the president had done during his 2023 campaign. He touted dollarization as the remedy to Argentina's aching economy, a way to fix triple-digit inflation and pull the country away from its sixth recession in a decade.
But after securing victory in November, he failed to appoint Emilio Ocampo to head the central bank, a promise he had made during the campaign. Ocampo was one of the loudest dollarization proponents on Milei's team, supporting the replacement of Argentina's peso for the greenback.
Instead, Milei's presidency has so far overseen a major peso devaluation, while pushing massive reform initiatives. On Friday, an controversial "omnibus" bill was passed in the lower chambers of Argentina's congress, moving forward efforts to privatize state entities and reduce subsidies.
Meanwhile, dollarization plans had also not emerged in talks with the International Monetary Fund, Milei said. The fund has been facilitating Argentina with a $44 billion loan program, and approved a $4.7 billion disbursement last week.