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Argentina’s hard right libertarian president-elect Javier Milei has named a former finance minister from the country’s mainstream centre right as his economy minister, in a conventional choice that has boosted markets wary of Milei’s radical image.
Luis Caputo ran Argentina’s finance ministry and then briefly its central bank from 2017 to 2018 under conservative former president Mauricio Macri, who once called him “the [Lionel] Messi of finance”.
A former trader who worked at JPMorgan and Deutsche Bank, Caputo is known for close ties with Wall Street and Buenos Aires’ banking sector.
The selection of Caputo, who is not a champion of Milei’s flagship campaign pledge to replace the Argentine peso with the US dollar, has been read by analysts as a sign that the libertarian will prioritise other reforms first. Most Argentine economists have classed dollarisation as risky and unfeasible.
Milei said during a radio interview on Wednesday that Caputo, who travelled with the president-elect this week to Washington for talks with the US treasury and IMF officials, “is the economy minister”.
However, his office did not immediately respond to a request for comment. Milei, who has no executive experience, has previously backtracked on appointments: earlier this month he cancelled the choice of Carolina Píparo — previously confirmed as head of his social security agency — in order to name another appointee in her place.
Milei had previously tapped Emilio Ocampo, an economic history professor and proponent of dollarisation, to lead and “shut down” Argentina’s central bank. But soon after Milei’s election victory, Ocampo backed away from the role amid rumours of Caputo’s appointment to the economy ministry.
Milei has not confirmed who will head the central bank. There is currently no separate finance ministry, though the economy and finance roles were separate during Caputo’s earlier stint as finance minister.
Earlier this year, Caputo’s economics consultancy Anker Latinoamerica published a paper saying dollarisation would be “difficult”, though “not impossible” to implement, and would require a “complex legal and financial architecture”.
Milei has said his economic plan will focus on rapidly cutting spending — what he has called taking a “chainsaw” to the Argentine state — and resolving a snowballing pile of more than 23.8tn pesos of short-term peso-denominated liabilities held by local creditors.
“It’s clear that the first problem we have to resolve is [those liabilities],” Milei told a local radio station on Wednesday, as he confirmed Caputo’s appointment.
“It’s fundamental that we do it . . . with a lot of expertise, because if we make a mistake there, we will end up with hyperinflation,” he added.
Caputo has indicated he favours a voluntary swap of the short-term instruments for sovereign bonds, to signal to the market that debts will no longer be paid by money printing but with public funds.
Caputo will also need to renegotiate Argentina’s troubled $43bn loan from the IMF, on which it has missed almost all of its targets this year.
The programme is a refinancing of a failed $57bn loan taken out by Macri in 2018, which Caputo has said he opposed. He left his three-month stint as head of the central bank amid tensions with IMF officials.
In 2018, Caputo faced a federal investigation into whether he failed to properly disclose links to offshore investment funds specialising in high-risk emerging market bonds when he joined Macri’s government in 2015. He previously claimed he had cut ties with the funds before taking office. Local media have reported that the probe remains open.
Caputo is also remembered for his controversial decision to issue a 100-year sovereign bond in 2017, part of a massive borrowing push that ended abruptly with a market crisis in 2018. Argentina defaulted on the century bond in 2020.
Milei has indicated he plans to appoint other mainstream politicians. He has suggested he will appoint Patricia Bullrich, the president of Macri’s PRO party who ran against Milei for the presidency, as security minister, a role she held in Macri’s government.
Such moves have boosted Milei’s approval ratings ahead of his December 10 inauguration, said Cristian Buttié, director of public opinion company CB Consultora.
“Milei will start with a 59 per cent positive rating — above his 56 per cent vote share,” Buttié said. “That’s partly because he has shown himself open to collaborating with other parts of the political spectrum, rather than closing himself off with his inner circle.”
Source: Financial Times