Argentina’s presidential candidate Javier Milei is in talks with investment funds abroad to obtain the foreign currency needed to dollarize the economy if elected later this year, according to an economic adviser.
With net international reserves deep in the red, Argentina would benefit from amassing an initial stock of dollars to ensure its solvency before ditching the peso in favor of the US currency, economist Diana Mondino, one of Milei’s advisers, said on Wednesday.
“I am conservative and would rather be able to show those dollars,” she told reporters in Buenos Aires, adding however that the move wouldn’t be necessary if the economy were stable.
Mondino didn’t elaborate on how much money Argentina would seek to borrow if Milei wins this year’s election, nor did she name potential lenders.
The libertarian politician unexpectedly won a primary election last month, promising to make the dollar legal tender in Argentina as a way out of inflation, currently running above 100% a year. Many economists have said the plan is unfeasible because Argentina doesn’t have enough dollars to make it work.
“People will be able to use the dollars saved under their mattresses,” Milei said at the fundraiser event at a Buenos Aires hotel Wednesday.
Freeze FX Rate, Shut Central Bank: How Milei Plans Dollarization
Milei plans to create a special purpose vehicle called Monetary Stabilization Fund based in a foreign jurisdiction such as Switzerland, Ireland or Luxembourg, to keep Treasury bonds currently held by the central bank, which would cease to exist. He also said Argentina’s economy would dollarize at the parallel exchange rate, which is close to $730 pesos per dollar.
Milei would not seek more money from the International Monetary Fund because debts with the multilateral lender is already too large, Mondino said.
Argentina has a record $44 billion program with the Fund that needs to be renegotiated by the future president. The country holds its presidential election on Oct. 22, with a possible runoff on Nov. 19.