Endless inflation: a candidate proposes the dollarization of the Argentine economy
Argentina is currently plunged into an unprecedented economic crisis. Inflation is reaching peaks and the incessant devaluation of the local currency, the peso, is only making the situation worse. Faced with this economic nightmare, a political candidate has emerged proposing a radical solution: the dollarization of the Argentine economy.
Javier Milei, candidate for the “Liberty Advance” party, won the August primaries with his promise to dollarize the Argentine economy. This proposal resonated favorably with many Argentines, desperate by hyperinflation and rising poverty. For them, the adoption of the dollar as the official currency could finally put an end to the economic crisis which has ravaged the country for several years.
With inflation exceeding 124% per year and a 20% devaluation of the peso in August, Argentina’s economic situation seems to be stuck in a vicious cycle. It is in this context that Javier Milei, an economist by training who became a media figure, was able to seduce Argentine voters. His anti-system speech, advocating radical economic measures, attracted the attention of many observers.
Among Javier Milei’s proposals, we find the abolition of the Central Bank and eight ministries, as well as a rollback on the liberalization of abortion and the abolition of legislation on environmental protection. But it is his flagship proposal, the dollarization of the economy, which provokes the most debate.
Some argue that dollarization could be the solution for Argentina. After several years of economic mismanagement under the presidencies of Mauricio Macri and Alberto Fernandez, the candidate’s speech brings a break with the political elites who have poorly governed the country. The economic situation, marked by galloping inflation and an increase in poverty, makes Javier Milei’s proposals credible in the eyes of part of public opinion.
However, many economists question the feasibility of dollarization. They say this measure requires a stock of liquid dollars to replace the local currency, which would represent around $20 billion to $25 billion in international reserves for Argentina. However, the Argentine central bank currently has negative net reserves, making official dollarization difficult to achieve.
Despite these criticisms, Javier Milei has established himself as an alternative voice in the Argentine political landscape. His growing popularity reflects the disillusionment of many Argentines with the traditional political class, which offers insufficient responses to a seemingly endless economic crisis..
In conclusion, Argentina is going through an unprecedented economic crisis, marked by galloping inflation and an incessant devaluation of its currency. The proposal to dollarize the Argentine economy, put forward by candidate Javier Milei, has aroused the interest of part of the population, desperate to find solutions to this crisis. However, the feasibility of this measure is questioned by many economists. Argentina’s economic situation therefore seems stuck in a vicious cycle, with little prospect of improvement in the short term.