1 of 1 Argentine Economy Minister Luis Caputo speaks to the press in Buenos Aires on December 11, 2023. Photo: Portal/Agustin Marcarian Argentine Economy Minister Luis Caputo speaks to the press in Buenos Aires on December 11, 2023. — Photo: Portal/Agustin Marcarian
Among the main economic measures taken by Javier Milei's government is the devaluation of the national currency, the peso, by more than 50%, which will further increase inflation, which is already close to 150% in 2023.
This will increase the prices of products like bread, gasoline and even streaming services like Netflix. According to the Infobae portal, the price of basic foodstuffs is expected to increase by 98.7% in the coming days, while the value of fuel is expected to increase by at least 37% there was a rush at gas stations this Wednesday (13) . It is still unclear whether there will be a salary recovery for professional groups.
“The measures are good in theory to fix the economy, but a lot of people will suffer,” Agustina Ferreira, 19, who works in a shop in the Argentine capital, told Portal. “Maybe there was another way [de resolver o problema] That wouldn’t affect the majority of people who work and study so abruptly.”
The Milei government's plan also includes cuts in subsidies, rising energy bills (electricity and gas) and transport costs (bus and train).
“If the dollar exchange rate is 800, bus tickets increase from 50 to 500 [pesos]“Everything is increasing,” said Facundo Marino, a 53yearold worker from central Buenos Aires.
He said he supported the plan to prevent deterioration but believed the changes would come as a shock to the population. “Either you raise salaries or I don’t know what will happen to the country,” Marino said.
For the economist Carla Beni, the beginning of Milei's term in office is full of uncertainty and is causing uncertainty among the population.
“Insecurity leads people, especially the poorest, to choose to hoard products. This could lead to a tightening of the inflation system,” said Carla, MBA professor at Fundação Getulio Vargas (FGV). g1.
Agricultural engineer Jose Diz considers the measures presented by the Minister of Economy necessary, but believes that their impact in practice will be great.
“Yesterday I was talking to my children at dinner and it was as if they told me that my salary was halved,” said the Argentine, who cares even more about the poorest sections of the population. “I don’t know how they’re going to survive when the cost of everything goes up 30 or 40%.”
According to the Argentine Social Debt Observatory at the Argentine Catholic University, in the third quarter of 2023, 44.7% of the country's population lived in poverty.
There will be adjustments for beneficiaries of social programs, but this measure only affects a part of the population.
Below are the measures announced by the Argentine Ministry of Economy:
1. Devaluation of the peso: 1 US dollar is worth 800 pesos; Today each dollar is worth 365 pesos. These include a temporary increase in the import tax (“Pais” levied on dollar purchases) and withholding taxes on nonagricultural exports.
- What the minister justified: “We will adjust the official exchange rate so that productive sectors have sufficient incentives to increase production.”
- Regarding the increase in import taxes, he said: “In this way, we benefit exporters through a better price and equalize the tax burden for all sectors, so that the agricultural sector is no longer discriminated against.”
two. Tenders: Suspend tenders for new public works and cancel tenders that have not yet begun.
- What the minister justified: “There is no money to fund further public works, which, as we know, often end up in the pockets of politicians and business people. Public works have always been one of the sources of corruption in the state, and with us that ends. Infrastructure. “The works in Argentina are carried out by the private sector because the state does not have the money or financing to carry them out.”
3. Reducing energy and transportation subsidies: In practice, electricity and gas bills will increase, as will train and bus fares throughout the Buenos Aires metropolitan area.
- What the minister justified: “Today the state pays artificially very low prices for energy and transport tariffs through subsidies. Politicians have always done this because it is how they deceive people and make them believe they are getting extra money. But Argentines must have already realized that these subsidies are not free, since they are paid with inflation: what they give you with the invoice price, they charge you with price increases in the supermarket. And with inflation, it is ultimately the poor who finance the rich. “In addition, the subsidies in the metropolitan region are an act of discrimination against the inland provinces.”
4. Reduce transfers to the provinces to a minimum.
- What the minister justified: “It is a resource that, unfortunately, in our recent history has been used as a bargaining chip to broker political favors.”
5. Suspension of government advertising for one year.
- What the minister justified: “In 2023, 34 billion pesos were spent on advertising between the presidency and ministries. There is no money for expenses that are not absolutely necessary, let alone to use taxpayers' money to support the media that is created only to extol the virtues of the current government.
6. Public bodies: Do not renew employment contracts that are less than one year old.
- What the minister justified: “A common practice in politics is to involve thousands of family members and friends before a change of government in order to protect their privileges.”
7. Reduction in government structure: reduction in the number of secretariats from 106 to 54 and ministries from 18 to nine.
- What the minister justified: The aim is to reduce the number of commissioned bodies.
8th. Social: Prioritize social projects that do not require intermediaries and strengthen programs like the one that supports mothers with children.
- What the minister justified: “Because of this emergency situation that we are about to experience, the President has asked us to focus primarily on the people who could suffer the most.”
9. Replace the import system with a system that does not require prior license information.
- What the minister justified: “Discretion is closed and transparency of the import approval process is guaranteed. In other words, anyone who wants to import can do so, period.”