The brand new Argentine government headed by the libertarian Javier Milei announced on Tuesday a series of orthodox measures to deal with a serious financial crisis, including a drastic spending cut and a 54% devaluation of the peso.
In the context of an annual inflation close to 150% and a poverty of 40%, The Government also said it will cut transport and energy subsidies and drastically reduce public works in order to eliminate the fiscal deficit.
The official exchange rate will go to 800 pesos per dollar from 365.5 pesos per dollar at the close of Tuesday, reported the Minister of Economy, Luis Caputo, in a recorded message that was broadcast on social networks.
“We are going to be worse than before for a few months, particularly in terms of inflation”Caputo noted. “If we continue as we are, have no doubt that we are going to hyperinflation,” he added.
With a poverty of 40%Caputo announced that the Government will increase spending on social assistance programs to alleviate the situation of the most vulnerable sectors.
Caputo pointed out that the Government will replace the current import approval system and will advance in the elimination of taxes on exports, in an attempt to improve the commercial flow of the country, which suffers from a pressing shortage of foreign currency.
The Milei Government, who assumed the presidency on Sunday after defeating Peronism in a runoff, will also reduce discretionary transfers of national funds to the provinces to a minimum.
The Argentine stock market moved upward again on Tuesday awaiting the announcements.
Source: Gestion
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