2023-12-13 03:50:32
New Argentine President Javier Milei (center) after an interfaith ceremony at the Metropolitan Cathedral, near the Casa Rosada government palace, in Buenos Aires, December 10, 2023. JUAN MABROMATA / AFP
The Argentine government of ultraliberal President Javier Milei, inaugurated on Sunday December 10, announced on Tuesday 12 a strong devaluation of more than 50% of the peso, the national currency, going to 800 pesos for the dollar, to stabilize the economy in the grip of a inflation and chronic debt. The devaluation of a peso which was considered notoriously overvalued, to just under 400 to the dollar, is part of a series of measures “emergency” announced by Economy Minister Luis Caputo, including a reduction in public subsidies for energy and transport.
These measures, explained the minister in a speech, aim to avoid the « catastrophe » of hyperinflation which, according to him, could reach 15,000%. “The genesis of our problems has always been budgetary”said Mr. Caputo, believing that for the first time, by voting with a large majority for Javier Milei, Argentines showed that they understood “there is no money”.
The devaluation, as well as the reduction in long-standing subsidies for transport and energy, is destined to initially strongly and negatively affect the purchasing power of Argentines, 40% of whom live below the poverty line. To their attention, the Minister of the Economy assured that the government will maintain social programs to assist with access to employment and “strengthen social policies for those who need them, without intermediaries”he insisted, like the “food cards” (purchase vouchers for the most deprived).
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Inflation at 143% over one year
President Milei indicated in his inauguration speech on Sunday that “the situation was going to get worse in the short term” before the economy, the third largest in Latin America, reaps the fruit of budgetary austerity, by controlling chronic inflation, currently at 143% over one year.
Minister Caputo also announced, in the interest of budgetary austerity, that the State “will not present any more offers” for public worksites, and cancel past contracts “which have not already started”. “Infrastructure projects in Argentina will be carried out by the private sector, because the State has neither money nor financing to carry them out” he explained.
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