The writer is director at the Georgetown Americas Institute and a non-resident senior fellow at the Peterson Institute for International Economics
On June 28, after several weeks of pressure in currency and bond markets, Luis Caputo, Argentina’s finance minister, uttered the words heard time and again in Latin America from many of his predecessors — I will not devalue. In 1981, José López Portillo, Mexico’s then president, made his famous claim that he was going to defend the Mexican peso like a dog. What followed was the start of Latin America’s debt crisis and lost decade.
Unlike previous governments in Argentina and the region, President Javier Milei’s administration has done many things right. Now Argentina and the IMF must redefine success in order to succeed, moving the focus from the sustainability of the currency’s quasi-peg to the dollar and a rapid disinflation process. Macroeconomic policy should focus on economic recovery and slower but sustainable disinflation.