Even before taking office, the elected president of Argentina, Javier Milei, went to Washington to formalize his strategic alignment with the United States for the ultraliberal mandate he intends to put into practice. He returned saying that the trip was positive and confirmed that finance expert Luis “Toto” Caputo will be the Minister of Economy, the one who will face a severe crisis, with annual inflation of 140% and 40% of the population in poverty.
“We presented the economic plan and the response from the White House was extremely favorable,” said Milei upon landing in Buenos Aires. While he finishes defining his cabinet, he is expected to lead a meeting with deputies and senators to try to advance the package of state reform laws, which he plans to send to Congress the day after his inauguration, scheduled for December 10th.
Regarding the future minister, he declared: “We had already defined him. When you look at the nature of Argentina’s problems, when you note that of the 15 points of fiscal deficit, Argentina generates 10 at the Central Bank, you realize that the first problem to be resolved is the Leliq. It is essential to solve this problem with a lot of expertise, because otherwise we will end up in hyperinflation.”
Leliq are bonds issued by the Argentine government, which offer liquidity in up to 28 days. There is a stock of this debt that needs to be cleared and this represents a problem, because it requires converting this debt into dollars or having dollars to buy this debt, he explains to the Brazil in fact economist André Roncaglia, professor at the Federal University of São Paulo (Unifesp) — the official dollar is currently worth 377 pesos for sale and the blue dollar (parallel), 945.
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According to him, the Leliq are equivalent to the overnight, purchase and sale operations of public securities for a period of one night, which became common in Brazil in the early 1990s, when monthly inflation reached 80%. Inflation in Argentina is far from that, but the economist considers the comparison valid, as it is a security that offers liquidity to organize bank finances.
Regarding Caputo, a person “connected to the financial market and the group of (former president Mauricio) Macri”, Roncaglia believes that he will be a more moderate minister than expected and that he will impose limits on Milei’s radicalized speech. “But, in essence, it is a reissue of the Macri government (2015-2019). He will defend liberalizing reforms, but nothing as radical as eliminating the Central Bank or dollarizing the economy, which, within the standards of economists’ knowledge, would be a bad idea for Argentina.”
However, it is worth noting that in recent days, Milei ratified his plans to close the Central Bank, privatize state-owned companies, carry out a strong economic adjustment and paralyze any and all public works.
The new minister
Caputo was Finance Minister and President of the Central Bank during Macri’s administration, when a loan was signed with the IMF (International Monetary Fund) currently in force, which imposes strict fiscal adjustment rules on the country and left as a legacy the most extensive loan in its history. history, a 100-year bonus qualified as “disastrous” by the General Auditor of the Nation.
Graduated in economics at the University of Buenos Aires, the minister announced by Milei had a career in banks such as JP Morgan and Deutsche Bank, where he presided over the Argentine branch, before creating Axis, his own investment fund. He is an expert in finance, so much so that when Macri invited him to exchange the Finance portfolio for the Economy portfolio, he chose to stay where he was.
Admirers of his administration argue that he provided the necessary resources to face the fiscal deficit. They highlight his willingness to work and his knowledge of international finance, as well as his good communication with Wall Street, the headquarters of the US financial market. In recent times, when his name was already circulating as a likely minister, he was called the “Messi of finance”, in reference to world champion player Lionel Messi.
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Caputo’s name was one of those mentioned in the case of the Paradise Papers, documents leaked in 2017 that indicate investments in tax havens by large corporations, celebrities and people from various nations. Due to these allegations, the future minister had to appear before Congress to explain his undeclared links with companies offshore.
Bullrich in Security
Although sources from the elected coalition Freedom Advances recently informed the Argentine press that Patricia Bullrich, candidate defeated in the first round and supporter of Milei in the second, will be Minister of Security, the president-elect did not confirm the information upon his return from the USA. When asked about this topic in a radio interview, he was evasive: “We are working on it. The definitions will be known on December 10th.”
Ambassadors in the USA and Brazil
On the other hand, Milei confirmed that Gerardo Whertein will be ambassador to the United States and ratified the continuation of Daniel Scioli at the Argentine Embassy in Brazil, in statements to a radio station.
With information from Página 12 and La Nación.
Editing: Leandro Melito