[1/2]Former Argentine Central Bank Governor Luis Caputo speaks during a news conference in Buenos Aires, Argentina, May 4, 2018. REUTERS/Marcos Brindicci/File Photo ACKNOWLEDGE RIGHTS
BUENOS AIRES, Nov 24 (Reuters) – Former Argentine central banker Luis Caputo and leading candidate to become the new economy minister met with representatives of local and international banks on Friday to outline the economic plans of President-elect Javier Milei, three sources and a bank said the group.
The meeting at the La Rural conference center in Buenos Aires comes as Milei, who has promised “shock therapy” to the struggling economy, rushes to assemble his economic team. Caputo is considered the leading candidate for this role.
However, at the meeting, Caputo refused to confirm that he would become the new economy minister, two of the sources said. Milei has not yet confirmed a date.
However, signs that libertarian outsider Milei is leaning toward a more orthodox economic team and policies have buoyed markets this week, with bonds up nearly 14% and stocks up over 40% since he won a runoff election last Sunday has.
Caputo emphasized the idea of an abrupt economic adjustment needed to contain inflation to nearly 150%, avert a looming recession, lift a series of capital controls and rebuild net reserves of minus $10 billion.
“Our approach is a fiscal and monetary shock from day one. The roadmap is orthodox and without any crazy things,” Caputo told the assembled bank officials, according to a senior banking source who attended the meeting.
Caputo, a former finance minister and central bank chief under the conservative government of ex-President Mauricio Macri, is seen as a more orthodox candidate for the new government of the libertarian Milei, which takes office on December 10th.
The local banking association ADEBA confirmed the meeting.
“It was a meeting where we exchanged views on the challenges facing the economy and the way we address them,” Javier Bolzico, president of ADEBA, told Reuters.
“The meeting was very positive. Caputo emphasized fiscal balance as the basis of the model and a comprehensive and market-oriented approach to the BCRA’s reimbursed liabilities. Caputo’s vision gave us peace of mind and confidence.”
Milei’s team did not respond to a request for comment.
Macri’s conservative PRO party backed Milei in the runoff and his allies are pushing to secure positions in the cabinet.
Caputo gave no details on how Milei’s government plans to approach public spending, nor what it plans to do with the central bank’s huge pile of short-term Leliq banknotes, which Milei is targeting because they expand the money supply of local pesos.
Caputo said Milei’s government would quickly lift currency controls, the first source and a second banking source briefed on the meeting said, but this would not happen immediately. He added that dollarization is not planned in the near term as fiscal and monetary stabilization is needed, the first source said.
“First you need a stabilization program,” Caputo said, according to the first source present at the meeting.
Milei had made closing the central bank and dollarizing the economy the key points of his election campaign, but acknowledged that these measures will take time given the economic crisis. However, earlier on Friday he said the central bank closure was “non-negotiable”.
Caputo also told bank officials that vigorously combating inflation was a top priority, but gave no details on how the incoming administration would curb prices.
The second banking source said Caputo discussed the need to comprehensively combat inflation and lower the Leliq stack, but did not provide details on how this would be accomplished.
“Given his knowledge of the market, he is one of those responsible for assessing the banks’ position before the new government,” said a third banking source who confirmed the meeting.
Reporting by Jorgelina do Rosario and Jorge Otaola; Editing by Adam Jourdan and Alistair Bell
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