The American newspaper The Wall Street Journal published an editorial this Sunday (12) in which it warned that Argentina needs dollarization for the reforms promoted by President Javier Milei to be successful.
If this success is sustained in the long term, Argentines will teach a “lesson” to left-wing Latin American governments, such as that of President Luiz Inácio Lula da Silva in Brazil, argued the conservative newspaper.
The editorial addressed the recent aid package that the Donald Trump administration approved to help Argentina.
Last week, US Treasury Secretary Scott Bessent announced that the United States directly purchased Argentine pesos and finalized a US$20 billion currency swap structure with the Central Bank of Argentina to help the country governed by Milei.
Despite the rise in GDP and the sharp drops in inflation and poverty, Argentina faces a severe shortage of dollars, which motivated the assistance from the Trump administration.
Bessent said that the success of economic reforms in Argentina would be beneficial for the entire Western Hemisphere and would serve the strategic interests of the United States.
“He’s right on this point. If Mr. Milei can make his free-market reforms an economic and political success, the lesson will spread to the rest of Latin America and beyond. It would be a rebuke to the wave of left-wing populism that has caused problems from Brazil to Colombia to Venezuela and Central America,” the WSJ wrote.
“But for these reforms to be successful, trust in the Argentine currency is necessary. This will not happen with the peso, which is why dollarization is the correct and now essential political alternative. Ecuador achieved a successful transition to a dollarized monetary system in 2000, which defeated inflation and continues to this day,” added the newspaper, which said that Milei’s “opposition” to dollarization is “difficult to understand”, as it was one of his campaign promises in the 2023 election.
The WSJ also stated that the instability of the peso, without dollarization occurring, could be an asset for the opposition in the national legislative election that will be held in Argentina on the 26th.
“After the elections, Mr. Bessent will be wasting dollar assets in this bailout if he does not pressure Mr. Milei to restore monetary solidity through dollarization,” he warned.
