'Today the challenge is to monetize an economy that has very low levels of liquidity,' explained Caputo
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In the framework of the Argentine Economic Congress ExpoEFI, the Minister of Economy, Luis Caputo, announced that the Government will present a new measure in the coming weeks to encourage the use of dollars in the Argentine economy, which, he assured, "will surprise." This initiative is part of the remonetization process that the economic team is promoting and will be added to other tools already implemented.
"Today the challenge is to monetize an economy that is at very low levels of liquidity," Caputo explained. He detailed that the system operates with less than half of its usual monetization, so it is necessary to incorporate more means of payment, both in pesos and dollars.
Currency competition and new tools
Caputo insisted that the Government is not concerned whether remonetization occurs in local or foreign currency: "We are in currency competition," he stated. In that sense, he announced that in two weeks a policy will be announced that will encourage saving and spending in dollars, although he avoided giving more details.
Toto Caputo anticipó que prepara una política clave para fomentar la dolarización
As a precedent, the minister recalled that instruments such as the withdrawal of pesos through bonds have already been implemented, specifically the property bond for dividends. He also explained that the Central Bank's profits will be used to build Treasury reserves and will not be used for current spending.
Results of the economic plan
Caputo highlighted the three stages of the Government's economic program:
Elimination of the fiscal deficit without raising taxes, reducing spending by 30%.
Correction of the quasi-fiscal deficit with negative real rates and the launch of the Boreal bond.
Remonetization process that is beginning to show its positive effects.
According to the minister, these decisions avoided hyperinflation and allowed for an economic expansion of 6% between December 2023 and December 2024. He also stated that real wages grew by 15% and that 10 million people were lifted out of poverty.
Dollarization, stability, and future reforms
During his presentation, Caputo emphasized that "there is no longer any reason for inflation" and anticipated that even "prices may fall" in sectors such as clothing, cars, and services. He cited the 4% drop in gasoline prices announced by YPF as an example and predicted that such adjustments will be frequent in a scenario of monetary stability.
He also stated that the "Argentine cost" will be corrected without devaluations, but through tax cuts, deregulation, competition, and private investment. In this context, he urged businessmen to "change the chip" and focus on real productivity.
Regarding the lifting of the exchange rate cap, he defended the sequence adopted by the current Government, differentiating it from Mauricio Macri's: "First we solved the fiscal problem, then the quasi-fiscal one, and then we capitalized the Central Bank," he stated.
International support and structural reforms
Caputo highlighted the support of the IMF and the U.S. Treasury, and assured that figures like Kristalina Georgieva consider Argentina a "model among the 195 member countries."
Looking to the future, the Government plans to consolidate growth with greater remonetization and structural reforms in fiscal, labor, and pension matters, subject to political decisions by President Javier Milei.
Economic Congress: path to a predictable Argentina
The presentation took place at the Buenos Aires Convention Center, organized by Invecq Economic Consulting and Messe Frankfurt Argentina. Under the theme "Path to stability: keys to a predictable Argentina," the meeting brought together executives and officials.
In addition to Caputo, participants include President Javier Milei, Secretary of Energy and Mining Daniel González, and Secretary of Commerce and Industry Pablo Lavigne.
In this third phase of the economic plan, the ruling party plans to move toward a floating dollar scheme within exchange rate bands, with greater openness for companies and total lifting of the cap for savers.
