The newly inaugurated government of Argentine President Javier Milei will halve the value of the Argentine peso. Economy Minister Luis Caputo said this on national television on Tuesday. Argentina suffers from inflation of 143 percent. Caputo fears that “if we continue as we have, we will inevitably experience hyperinflation. Our mission is to avert that catastrophe.” But before the economy gets better, “we will first be worse for a few months” due to the measures.
According to the Milei government, the measure is painful, but desperately needed to prop up the faltering Argentine economy. Four in ten Argentines live in poverty. The country is also struggling with a budget deficit, a trade deficit of 40 billion euros and a debt to the International Monetary Fund (IMF) of 42 billion euros. In April, the country must repay the equivalent of 10 billion euros in debt.
‘Decisive steps’
Caputo also announced that the government is suspending tenders, cutting energy subsidies, firing civil servants and halving the number of ministries. The IMF, which advocates sometimes controversial austerity measures for ailing governments, sees the measures as a “good foundation” for negotiations with Argentina about paying off its debt.
“These decisive first steps,” according to the IMF, will help “stabilize the economy and build a foundation for sustainable and private sector-driven growth.” According to critics, some of the libertarian Milei’s plans, including the introduction of the dollar, are not feasible. Economic, social and cultural rights of citizens are also often violated by such policies, he said a report from Human Rights Watch.
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