In a Wednesday radio interview, Argentina’s incoming president Javier Milei disclosed that Luis Caputo will take over as the nation’s new minister of the economy. The main responsibility of Caputo will be to pull Argentina out of its dire economic situation. Milei noted that Caputo and Nicolas Posse, the cabinet chief, had remained in Washington to continue negotiations over an economic plan for Argentina with officials from the US Treasury and the International Monetary Fund (IMF).
One of Caputo’s duties will be carrying out Milei’s plans to reduce the country’s above 140% inflation rate. Milei’s platform will be postponed until public spending can be reineemed in to balance the budget, which is essential to combating extreme inflation. Other proposals, including shutting the central bank and dollarizing the economy, will also be shelved.
The new economy minister will have a lot on his plate, including removing the old government’s intricate system of price freezes and currency controls without sending the country into hyperinflation. Caputo will have to remove more than a dozen exchange-rate restrictions in order to encourage exports and safeguard the nation’s almost exhausted foreign exchange reserves. He will also need to deal with the price limits on over a thousand basic items and the discrepancy between the official peso rate and the parallel exchange rate.
In his previous role as head of finance under Mauricio Macri, Caputo worked with holdout bondholders to reach a $16.5 billion settlement that allowed Argentina to reenter the global credit markets. Additionally, he issued a 100-year bond, which defaulted in 2020 and was subsequently swapped by Alberto Fernandez‘s government. Macri appointed Caputo to lead the central bank in 2018 amidst a currency crisis, but he left the position after just a few months because of disagreements with the IMF. In his new role, Caputo met on Tuesday with representatives of the IMF, including Rodrigo Valdes, the director of the Western Hemisphere, and Gita Gopinath, the deputy first managing director.