As the country’s leadership change led it to decline its BRICS membership invitation, Argetnina’s dollarization plan has been predicted to fail by economists. Indeed, Javier Milei has officially won the country’s presidential election. Now, he is set to embrace Western ties in the short term.
However, the development could have negative implications for the country overall. Specifically, the porous economic conditions may not be able to support dollarization the way that Milei’s new regime hopes. Indeed, economists have raised concerns regarding how the plan could ultimately develop.
Also Read: What is Happening With the US Dollar and Argentina’s Peso?
Argentina’s Dollarization May End in Failure, Economists Say
For the last year, the BRICS bloc has shown a massive increase in its growth rate. Indeed, it capitalized on that when it announced a six-country expansion plan within its 2023 annual summit. Yet, one of those countries is poised to decline the invitation as it seeks to instead focus on increased Western cooperation.
Subsequently, as its BRICS invitation is rejected, ARgentina’s dollarization plan is predicted to fail by economics. Specifically, Bloomberg reported that three top Latin American economists have expressed concern over the plan. Subsequently, it was noted that it could end in difficulties for the nation.
Also Read: Argentina Has No Interest in BRICS
“It makes absolutely no sense to go in this direction,” says Guillermo Ortiz, the Bank of Mexico’s former governor. Moreover, he stated that dollarization cannot fix the country’s “structural problems.”
Additionally, Business Insider notes that Argentina is not likely to have enough dollars to incur dollarization. At least, they note that it is impossible without creating further economic risk and a potential crisis for citizens. Currently, the Central Bank has a foreign exchange deficit of $7.5 billion. That figure will only increase if Milei’s Argentian opts for a greater embrace of dollarization.
