GOOD AIRS: Argentina announced on Tuesday a strong devaluation of its currency and cuts in energy and transport subsidies as part of shock measures, new president Javier compassion says they are needed to deal with an economic emergency.
Economy Minister Luis Caputo said in a televised message that the Argentine peso will be devalued by 50%, from 400 pesos to the US dollar, from 800 pesos to the dollar.
“For a few months, we will be worse than before,” said Caputo, two days after the libertarian Milei was sworn in as president of South America's second-largest economy and immediately warned of tough measures.
Milei said the country did not have time to consider other alternatives.
Argentina is suffering annual inflation of 143%, its currency has plummeted and four in 10 Argentines are impoverished. The nation also has a huge fiscal deficit, a $43 billion trade deficit, plus a staggering $45 billion in debt to the International Monetary Fund, with $10.6 billion owed to multilateral and private creditors by April.
As part of the new measures, Caputo said the government is canceling tenders for any public works projects and cutting some public jobs to reduce the size of the government.
He also announced cuts to energy and transport subsidies, without providing details or saying how much, and added that Milei's administration is reducing the number of ministries from 18 to 9.
He said the measures are necessary to reduce the fiscal deficit that he believes is the cause of the country's economic problems, including rising inflation.
“If we continue as we are, we will inevitably head towards hyperinflation,” said Caputo. “Our mission is to avoid a catastrophe.”
The IMF welcomed the measures, saying they provide “a good basis” for future discussions with Argentina over its debt to the institution.
“These bold initial actions aim to significantly improve public finances in a way that protects society's most vulnerable and strengthens the exchange rate regime,” IMF spokeswoman Julie Kozack said in a statement. “Its decisive implementation will help stabilize the economy and lay the foundations for more sustainable, private sector-led growth.”
The main figures in the former Peronist government of Alberto Fernández did not comment on the measures announced Tuesday.
But social leader Juan Grabois, close to former center-left president Cristina Fernández (2007-2015), said that Caputo announced “a social murder without hesitating like a psychopath about to massacre his defenseless victims.”
“Your salary in the private sector, in the public sector, in the popular, social and solidarity economy, in the cooperative or informal sector, for retirees and pensioners, will give you half as much in the supermarket”, he said. “Do you really think people won’t protest?”
“There is no money,” has been a common refrain in Milei's speeches, using it to explain why a gradualist approach to the situation is a failure. But he promised that the adjustment would almost entirely affect the State and not the private sector, and that it represented the first step towards regaining prosperity.
Milei, a 53-year-old economist, gained fame on television with expletive-laden tirades against what he called the political caste. He parlayed his popularity into a seat in Congress and then, just as quickly, into a presidential run. The landslide victory of the self-proclaimed “anarcho-capitalist” in the August primaries sent shockwaves through the political landscape and upended the race.
Argentines disillusioned with the economic status quo proved receptive to an outsider's bizarre ideas to remedy their problems and transform the nation. He won the second round of the November 19 elections decisively – and sent away the Peronist political force that had dominated Argentina for decades. Still, he is likely to encounter fierce opposition from lawmakers in the Peronist movement and the unions he controls, whose members have said they refuse to lose wages.
On Sunday, Milei took office at the National Congress building, and the outgoing president, Alberto Fernández, placed the presidential banner over him. Some of the assembled lawmakers shouted “Freedom!”
Many Argentines wonder which Milei will govern their country: the chainsaw-wielding, anti-establishment crusader from the election campaign, or the more moderate president-elect who has emerged in recent weeks.
As a candidate, Milei promised to purge corruption from the political establishment, eliminate the Central Bank that he accused of printing money and fueling inflation, and replace the rapidly depreciating peso with the U.S. dollar.
But after winning, he chose Caputo, a former central bank president, to be his economy minister and one of Caputo's allies to run the bank, appearing to have put his much-vaunted dollarization plans on hold.
Milei presented himself as a willing warrior against the advance of global socialism, just like former US President Donald Trump, whom he openly admires.
He said during his inaugural speech, however, that he has no intention of “persecuting anyone or resolving old vendettas” and that any politician or union leader who wants to support his project will be “welcomed with open arms.”
His apparent moderation may be the result of pragmatism, given the scale of the immense challenge that lies ahead, his political inexperience and the need to forge alliances with other parties to implement his agenda in Congress, where his party occupies a distant third place. in number of occupied seats.



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