President Javier Milei recognized that the Decree of Necessity and Urgency (DNU) that he presented this Wednesday on the national network and that deregulated important aspects of the economy works as a “pre-dollarization”, since it allows contracts to be agreed in foreign currency.
“You can now agree to contracts in foreign currency and they have to be fulfilled in this currency. In other words, we are enabling you to use foreign currencies in your transactions. Do you realize the shock of freedom that all this implies? “He remarked in dialogue with Radio Rivadavia, in reference to the modification of article 765 of the Civil and Commercial Code that establishes the mega DNU. Asked if this represents “pre-dollarization,” Milei acknowledged that “it could be” like that. “You know that I am in favor of ending the Central Bank, but first I have to clean it up and that is what we are doing. “We are working hard to clean up the Central Bank,” she noted.
On the other hand, when asked about the restriction on purchasing more than US$200 per month, Milei pointed out: “Today in the free market you can buy all the dollars you want and no one is going to chase you. “You go and buy whatever you want.” Regarding exchange control, she assured: “We are going to remove the stocks when we finish cleaning up the Central Bank and the entire monetary issue, and when we finish cleaning up the problem of the monetary surplus in the economy.”
“The stocks generate excess demand in the foreign exchange market that has as its counterpart an excess supply in the rest of the economy. This implies that the price of bonds is low and therefore the interest rate jumps and it implies that you have an excess of supply in the goods market and activity falls, for some reason we have a GDP per capita that is 15% lower than that we had in 2011,” he added. And he concluded. “Removing the stocks is a mechanism that will allow economic activity to rebound, but we cannot open the stocks while the conditions to be able to withstand an abrupt portfolio change are not met.”
The statements came yesterday, after the publication of the questioned DNU that deregulates the economy, makes labor rights more flexible, enables privatizations and allows contracts to be set in foreign currency, among the more than 300 reforms it establishes.
Source: Ambito
