¡Che Milei!
Yesterday, the winner of Argentina’s presidential elections was provisionally announced as Javier Milei, after accruing ~55% of votes against rival Sergio Massa — an unprecedented victory for the controversial right-wing libertarian.
Milei’s campaign rode a wave of national anger at the political mainstream, positioning the former TV and TikTok pundit as an outsider. But, even with an eyebrow-raising style — including wielding a chainsaw; temporarily supporting the creation of an organ transplant market; and calling Pope Francis “an envoy of Satan” — Milei faces serious economic challenges. Inflation in the South American nation has been out of control, hovering above 140% as of the latest estimate, along with a crippling national debt.
Dollarization nation
One of Milei’s objectives is to abolish Argentina’s central bank and dollarize its economy to overcome the current crisis, which has left ~40% of its 45 million citizens in poverty. With the country heading towards its 6th recession in a decade, the Peso (ARS) has crumbled, with 100 Pesos now buying just 28 cents.
Changing the national currency to USD would send Argentina into uncharted territory. By giving up control of its monetary policy, it would be following the much smaller countries of Ecuador and El Salvador in switching to the more-stable dollar. However, despite Argentinian bonds rising following his victory, the new president has a long way to go: analysts estimate that foreign reserves still stand ~$50 billion short of a credible cushion to make Argentine dollarization a reality.
