Javier Milei, the current President of Argentina, has taken measures that have led to a reduction in the deficit and drop in inflation. Mario Blejer, a 75-year-old former head of the Central Bank during the 2002 crisis, is surprised by these developments. Despite the rise of the dollar under Milei’s leadership, he believes that devaluation and rapid disarmament of stocks are not necessary.
In his time at the IMF and during the transition between De la Rúa and Duhalde, Blejer reflects on similarities with the current stage but still opposes dollarization. He discusses Milei’s assertion that there is no exchange delay but acknowledges that while it may be true in terms of money supply, it does not account for wages. Blejer warns against devaluing as it could lead to higher inflation and create expectations of failure. Instead, he emphasizes the need for rational measures to achieve a new balance in the economy without high poverty rates or severe economic disruptions.
Regarding inflation rates in Argentina, Blejer cautions against celebrating too quickly. He suggests focusing on core inflation instead of headline inflation to get a better understanding of how monetary and fiscal policies are affecting prices. The government’s success depends on achieving this balance without sacrificing long-term stability or growth potential.
Blejer also weighs in on Milei’s approach to lifting stocks and addressing market imbalances. He recommends careful intervention in the exchange market to avoid creating a crisis while maintaining negotiation skills and building alliances with other stakeholders to navigate complex challenges effectively.
When discussing potential plans for dollarization or unsustainable adjustments with vulnerable sectors, Blejer emphasizes strong leadership and pragmatic measures to achieve long-term stability without drastic changes that could harm economic growth.
In conclusion, Mario Blejer acknowledges Javier Milei’s efforts towards balancing Argentina’s economy but remains cautious about certain aspects such as devaluation and stock market interventions. While he supports rational measures towards achieving long-term stability, he also highlights the importance of negotiation skills and coalition governments when navigating complex economic challenges.
