Argentina President Javier Milei detailed strategies to combat column inflation sent to the newspaper The nation. According to him, persistent inflation in the country is the result of decades of mismanagement of the Central Bank of the Argentine Republic (BCRA), including withdrawals and uncontrolled currency emission. He states that, to solve the problem, it is necessary not only to cut the flow of money issuance, but also to recompose the BCRA equity.
Milei points out that the inflationary situation in his country was aggravated by policies that deteriorated the BCRA heritage, such as the “monumental fraud of asymmetrical pesification” in 2001, which resulted in the “$ 14 billion theft that supported the monetary base”. Other episodes, such as the sale of future dollars in 2015, also contributed to the emptying of BC reserves, he said. “In the last 25 years, politics, through the BCRA, have stole from the Argentines $ 110 billion.”
He argues that when the BCRA heritage becomes negative, the price level needs to climb to balance the balance, generating inflation. To reverse this scenario, Milei states that his government has acted on two fronts: cutting the monetary emission and regularizing debt stocks.
The agreement with the International Monetary Fund (IMF) is part of Milei’s strategy to restore the BCRA heritage. He explains that IMF resources will be used to cancel part of the Treasury debt with the BC without increasing gross debt. “The agreement with the IMF aims to restore the BCRA heritage, so that inflation is just a bitter memory of the past,” he wrote.
Milei rejects criticism that the agreement only exchanges creditors, stating that this would be “to accept that the policy would like to continue stealing the Argentines via inflation.” He also denies that the strategy implies tax increases, as gross debt does not grow. “Nothing will detain us in our task of exterminating inflation and making Argentina big again,” he concluded.
