BRICS Economist Forecasts Failure for Argentina's Dollarization Plan

• Argentina's Dollarization Plan Foreseen to Fail Amid Leadership Change
• Economists Express Concern Over Dollarization
• Guillermo Ortiz's Critique
• Room for Potential Crisis

Argentina's Dollarization Plan Foreseen to Fail Amid Leadership Change

With the recent shift in Argentina's leadership resulting in a declined BRICS membership invitation, the country's plan for dollarization has received sceptical predictions from economists. The newly elected president, Javier Milei, anticipates strengthening Western ties in the short term; however, such a development might have adverse implications for the nation overall. The current fragile economic climate may be ill-equipped to support dollarization as optimistically envisioned by Milei's administration.

Economists Express Concern Over Dollarization

Despite witnessing a remarkable growth rate in the past year, the BRICS bloc's announcement of a six-country expansion plan within its 2023 annual summit may be hampered by Argentina's possible rejection. Argentina, currently leaning towards enhancing Western cooperation, foresees a failure with its dollarization plan as predicted by economists.

Specifically, Bloomberg has reported that three prominent Latin American economists have expressed apprehension over the plan, warning that it could introduce hardships for the nation.

Guillermo Ortiz's Critique

Guillermo Ortiz, former governor of the Bank of Mexico, voiced that it makes no sense to proceed in this direction. In his view, dollarization cannot rectify the country's structural problems.

Room for Potential Crisis

Furthermore, according to Business Insider, it is improbable that Argentina possesses sufficient dollars for implementing dollarization without escalating economic risk and sparking a possible crisis for its citizens. Presently, the Central Bank is experiencing a foreign exchange deficit amounting to $7.5 billion. This shortfall is likely to rise if Argentina, under Milei's leadership, decides to intensify its commitment to dollarization.

Edited by Jonathan Stoker