For Miguel Pesce, dollarization is “materially impossible” and requires about US$30 billion

“There is no chance of dollarizing all the pesos that exist because $30 billion is needed to cover the entire system,” said Miguel Pesce, former president of the Central Bank (BCRA) in an interview in Radio 10. He also criticised the deregulation programme being undertaken by the Government, stating that it “has no insight into the reality of the Argentine economy.”

And for Pesce, A deregulation plan is being advanced without considering that there are few companies operating in the market and this leads to the consolidation of oligopolies in the face of a program of this type. He assured that “the Government has an economic plan focused on monetary issues.”

He pointed out that Argentina has, today, “a very large level of recession and 400,000 jobs have been lost” between the last quarter of last year and the first of this year.” There have been circumstances in which devaluation has been resisted, but the market continues to expect devaluation and that affects market dynamics.

Pesce spoke about the exchange rate lag

He also stated that, “As the exchange rate lags and the gap widens, grain exporters do not settle”. He explained that it is something that is normal and that “it has no ideology.” In that sense, he recalled that, during his management at the head of the BCRA, an entity that he led between 2019 and 2023, he experienced this circumstance and anticipated that, “until there are other types of exports, The countryside is the main generator of foreign currency“.

When asked about the resignation of the Secretary of Agriculture, Fernando Vilella, he said that the countryside “has that power” and did not rule out that the Government’s decision was, in part, due to that.

Another of the topics that Pesce spoke about was the monetary emission of the current GovernmentHe pointed out that “during the first five months of this year, the level of issuance reached is very similar to that of last year.” He said that, although they can say that they are not doing it to finance the Treasury, they are issuing and that makes it difficult for them to control inflation.


“What happens is that, anyway, The Government must know that issuance is not the only reason for inflation. “A strong devaluation generates inflation and every Argentine economist knows that,” Pesce said.

However, he said that “it is possible that inflation will stabilise, even without issuance, at around 4% or below” given that, as he explained, that is not the only element that puts pressure on price dynamics. “The exchange rate lag works as an inflationary anchor today,” he said.

The Sturzenegger vs. Caputo dispute

Finally, Pesce spoke about Federico Sturzenegger’s entry into the Government and assured that “he had a conflict situation in 2018” with Luis Caputo, But he said that “people change and they can possibly live together.” However, he pointed out that “this is a ‘strange’ government, with two ministers of the Economy and none of Education, when they included that element in the May Pact as an important issue.”

Source: Ambito

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