Economy Minister Luis Caputo said the government has not set a date to dismantle foreign exchange restrictions known as the “cepo” in a press conference presenting what he called the “second stage of the stabilization plan.” 

However, in a joint press conference, Caputo and Central Bank head Santiago Bausili said they would move the Central Bank’s interest-bearing liabilities to the Treasury, as a measure to clear the monetary authority’s balance sheet. 

They argued this would allow the government to close the “second faucet” of monetary issuance, which the government of President Javier Milei has long maintained is a driver of inflation.

“The money issuance faucet of fiscal deficit was closed, something that was abused during the last government and generated all this imbalance and inflation that we have seen,” he said. “In this second stage, we are closing the tap of the second issuance channel, which is the interest paid by the Central Bank on interest-bearing liabilities.”

Bausili said a new Treasury bill will be made available to banks to place their surpluses, and that a “floating coupon” will determine the benchmark interest rate. They will meet with banks on Monday to explain to them how the new scheme works, they added.

An official at the International Monetary Fund (IMF) told the Herald that the lender welcomed the announced measures as the Fund considered they would “strengthen the monetary policy framework.”

Earlier, Milei had said that, after the approval of the Ley Bases, the country’s economy would enter into its “second stage”. “The zero deficit stage is over, now we are going into the zero [monetary] issuance stage,” he said in an interview with LN+ TV station.

Caputo clarified that the economic cabinet is not “in love” with the cepo, but limited himself to saying that the administration would abandon it during a “third stage.” 

“We have not set a date; we have set parameters that imply macroeconomic order so that we are as safe as possible and do not generate any shock that would mean a risk for the people,” he said.

This goes in line with a joint statement by the Economy Ministry and the Central Bank published two weeks ago, saying the government would only lift the cepo if it could do so without risking its progress in fighting inflation and accumulating reserves. That statement likewise said the administration would not give specific dates for lifting. 

In its February review of Argentina’s program, the IMF said the country’s authorities had committed to lifting it this year, but June’s review scrapped any mentions of specific dates.

In the conference, Caputo also denied he would devalue the peso, and denied that the IMF had asked him to do so. “Devaluing makes no sense,” he said. “The best way to generate competitiveness is to lower taxes, inflation, and the cost of capital.”

The minister also stressed that he would decrease the PAIS tax “between August and September,” when the Ley Bases is enforced and the administration starts receiving funds from the fiscal package.