Argentina’s new president devalues peso, cuts spending - Deseret News
SOURCE: Deseret News
By Payton Davis
December 14, 2023
The new president, Javier Milei, says the moves are part of economic "shock therapy"
A worker counts money at a grocery store in Buenos Aires, Argentina, on Nov. 21, 2023. In the past five years, Argentina’s currency has lost about 90% of its value against the U.S. dollar.Natacha Pisarenko, Associated Press
New Argentine President Javier Milei’s government has devalued the country’s currency and cut energy and transportation subsidies to deal with an economic emergency.
The announcement came after Milei’s weekend inauguration. Economy Minister Luis Caputo said the Argentine peso will be devalued by 50 percent to 800 to the U.S. dollar from 400 pesos to the dollar, PBS reported.
The moves are part of “shock therapy” to deal with Argentina’s hyperinflation and high unemployment, according to BBC.
Reaction: Many analysts believe only “radical” measures like the ones taken have a chance to rescue an economy in as dire of a state as Argentina’s, per The Associated Press.
- Caputo said the plan would be “painful” in the short term but necessary, Reuters reported.
- The International Monetary Fund, to which Argentina owes a $45 billion debt, “welcomed the measures,” according to PBS.
- “These bold initial actions aim to significantly improve public finances in a manner that protects the most vulnerable in society and strengthen the foreign exchange regime,” said IMF spokesperson Julie Kozack in a statement.
What’s next?: According to AP, Milei making his economic vision a reality partly hinges on him winning support in Congress, where his party is only third in the number of seats it holds.
- Milei has promised to slash the number of government ministries from 18 to 9, according to PBS.
