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Milei election poster: more pragmatic attitude

Photo: Tomas Cuesta / Getty Images

Despite the planned closure of the central bank, Argentina's future president, Javier Milei, has appointed a new chief monetary officer. Economist Santiago Bausili will lead the central bank, Milei said on Wednesday, confirming a report by the Reuters news agency. Bausili is a former finance minister and is considered a close ally of the future economy minister Luis Caputo, who headed the central bank for a few months in 2018.

During the election campaign, Milei announced an economic shock therapy for the South American country, which is struggling with high inflation rates, an economic crisis and increasing poverty. Even after his victory in the presidential election, the right-wing populist had assured that he would implement his announcement and close the central bank. This campaign promise is "non-negotiable," stressed Milei, who will take office on December 10.

Since his victory in last month's runoff, however, Milei has taken a more pragmatic stance. Accordingly, he wants to concentrate primarily on reducing the budget deficit. At the same time, he indicated that he was in no hurry to abolish the national currency, the peso, in favor of a peg to the US dollar.

The South American country has been struggling with a severe economic crisis for years. The inflation rate was recently more than 140 percent. Analysts expect the inflation rate to rise to 185 percent by the end of the year, according to a survey by the central bank.

Gross domestic product is expected to shrink by two percent this year. This is due to the drought, which has reduced the corn and soybean harvest by half. This, together with the triple-digit inflation rate, is likely to lead to a further increase in poverty. Already, two-fifths of Argentines live below the poverty line, as their salaries and savings have been eaten up by the huge price increases.