The Economist Emilio Ocampoarchitect of the plan that wants to apply Javier Mileiwill take over as head of the central bank with the aim of preparing the ground to establish a dollarization in Argentina.
Milei met Ocampo this year almost out of curiosity: he was one of the authors – in this case together Ivan Cachanosky– of a plan aimed at replacing the devalued Argentine pesos with the dollar, in the style of what was done by Ecuador.
«I had four plans at my disposal to dollarize, but the one that convinced me the most was Ocampo’s, it even made me put aside mine,» revealed the now president-elect.
«@JMilei called me and asked me to advise him on issues related to dollarization. I responded affirmatively. I’m joining the team. VLLC!» Ocampo had expressed months ago to announce his arrival in the «El Peluca» teams.
From there, everything was dizzying, and Ocampo paraded through channels, radio and the rest of the media with his always dapper, almost gentleman-like appearance. Now, he is twenty days away from taking over as head of a Central Bank without reserves, with an exorbitant debt and growing imbalance caused by the sky-high rates that he pays to obtain some financing.
Who is Emilio Ocampo?
The one chosen by Milei to direct the Central Bank is a specialist in finance and economics, currently director of the Center for Economic History Studies of the University of CEMA (UCEMA) and member of the Academic Council of the Libertad y Progreso Foundation.
From 1990 to 2004 he dedicated himself to investment banking in cities such as New York and London, while in Argentina, for example, the «Convertibility Plan» headed by the minister was implemented. Sunday Cavallowhich ended in a catastrophe but for eight years was able to keep prices at bay, which was highly valued by vast social sectors.
Two decades later, Ocampo once again raises the possibility that «if you dollarize in January or February 2024, by April or May 2025, inflation will be at levels convergent with the United States.»
Regarding his vision of dollarization, Ocampo maintains that to advance with this measure it is necessary to eliminate inflation «and quickly stabilize economic variables, in a period that does not exceed «April or May 2025.»
For Ocampo, dollarization «is the alternative that has the least probability of failure.»
«Our addiction to populism led us to not have the capacity to have a stable currency. We are like in 1989: at the end of an era of economic disorder, which is why a harsh monetary reform is needed,» he repeated several times throughout the electoral campaign.
Ocampo maintains that dollarization «would play the same role as Convertibility in the first part of the ’90s, to accompany the rest of the structural reforms that must be carried out.»
This economist admits that «dollarization is compared to an ideal that never existed in Argentina. We cannot criticize it for not doing things that none of the other alternatives on the table can do.»
And he explains that «now we have no room for failure. We come from more than a decade of stagnation. And having an ephemeral change is terrible: we have to have economic policy rules that survive a bad Government.»
For Ocampo, the «economy is de facto dollarized. We pay all the costs but we do not have the benefits. We are talking about a regime change.»
The key steps to achieve dollarization
Ocampo maintains that to advance with dollarization «inflation must be eliminated. And for that it is necessary to have political support, which allows the economy to be stabilized very quickly, by April or May 2025.»
«To stabilize, the options are to fix the nominal exchange rate, the monetary base and the interest rate. In the emerging world, stability is achieved with a fixed exchange rate. And that, by decision of the Central Bank or by Convertibility , it’s not going to work, and it leaves us with only dollarization as a scheme.»
He also often repeats that each country «dollarizes as it can, according to its particular circumstances, as happened in Latin America with El Salvador and Ecuador.»
Completely aligned with Milei, Ocampo considers that the Central Bank «does not fulfill any of its functions.»
«Its balance sheet is totally distorted. That is why it is necessary to reorganize the monetary authority, transferring certain functions to other entities,» he said.
In this scenario, Ocampo even proposed «reviewing» the swap with China, considering that it is «covered in opacity.»
And also create a monetary stabilization fund «to reorganize the debt that the Central Bank has» with the leliqs.