The Argentine government of ultra-liberal President Javier Milei, inaugurated on Sunday, December 10, announced on Tuesday, December 12, a sharp devaluation of the national currency, the peso, by more than 50% to 800 pesos to the dollar to stabilize the economy under control of inflation and chronic debt. The devaluation of a notoriously overvalued peso to nearly 400 to the dollar is part of a series of “emergency measures” announced by Economy Minister Luis Caputo, including cuts in public subsidies for energy and transport.
These measures, the minister explained in a speech, are aimed at preventing the “catastrophe” of hyperinflation, which, according to him, could reach 15,000%. “The origin of our problems has always been budgetary,” said Mr. Caputo, estimating that by voting with a large majority for Javier Milei, Argentines had shown for the first time that they understood “that there is no money.”
The devaluation and the dismantling of long-standing subsidies for transport and energy will initially have a strong and negative impact on the purchasing power of Argentines, 40% of whom live below the poverty line. To them, the Minister of Economy assured that the government would maintain social programs to facilitate access to employment and “strengthen social policies for those who need them, without intermediaries”, as he emphasized, such as “ration cards” (purchasing). Vouchers for those most in need).
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Inflation at 143% over a year
President Milei suggested in his inaugural address on Sunday that “the situation would worsen in the short term” before the economy, the third largest in Latin America, reaps the benefits of austerity measures by controlling chronic inflation. , currently at 143% over a year.
Minister Caputo also announced, in the interest of austerity measures, that the state would “no longer submit offers” for public projects and cancel signed contracts “that have not yet started.” “Infrastructure projects in Argentina are carried out by the private sector because the state has neither money nor financing to carry them out,” he explained.
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