Argentina’s Milei Proposed Dollarization Strategies at IMF Meeting

By Jorgelina do Rosario

LONDON – Argentina’s unexpected presidential front-runner, radical libertarian Javier Milei, discussed potential models for dollarizing the country’s economy during a meeting with representatives from the International Monetary Fund (IMF). This meeting, confirmed by both parties, aimed to provide the lender with insights into the unconventional candidate, who topped last week’s primary elections, and his prospective policies that could influence Argentina’s $44 billion loan agreement with the IMF.

Milei secured 30% of the primary vote, surpassing the ruling Peronist coalition’s 27% and the main conservative opposition’s 28%. He has vowed to eventually eliminate the central bank and replace the struggling peso with the U.S. dollar.

During the 80-minute session, Milei shared his economic plans and stated that his team is developing "different models of dollarization," according to two sources familiar with the discussion. He also reassured IMF officials that he does not intend to default on obligations to the fund or bondholders. The IMF was particularly interested in gaining further details about Milei’s dollarization strategy.

An IMF spokesperson noted that the conversation with Milei and his team provided a chance to exchange views on Argentina’s current economic situation and to learn more about his policy priorities.

Milei was accompanied by his economic advisers Carlos Rodriguez, Roque Fernandez, and Dario Epstein. The IMF’s delegation included Rodrigo Valdes, Director of the Fund’s Western Hemisphere Department, and Luis Cubeddu, the deputy director.

Milei’s spokesperson highlighted that he presented an economic program focusing on reducing the fiscal deficit, liberalizing the economy, unifying the various currency exchange rates, and introducing monetary reforms that would eventually lead to the abolition of the central bank.

The primary election results are viewed as an indicator of voter sentiment as the country approaches its general election on October 22, when citizens will elect a president, vice president, congressional representatives, and provincial governors.

This unexpected outcome led to volatility in Argentina’s bond and currency markets earlier this week, prompting the central bank to raise interest rates by 21 percentage points to 118% and to devalue the currency peg by 18%.

Next week, the IMF’s executive board will convene to discuss a $7.5 billion disbursement to Argentina, following an agreement on two combined program reviews in July. Currently, the nation’s net foreign currency reserves are negative.