OAN’s Abril Elfi
6:02 PM – Tuesday, December 12, 2023
Argentina has announced the devaluation of their currency due to an economic shock measure.
Argentina announced a significant devaluation of its currency as well as reductions in energy and transportation subsidies on Tuesday, and according to new President Javier Milei, the shock adjustments are necessary to address the country’s economic “emergency.”
In a broadcast speech, Minister of Economy Luis Caputo declared that the value of the Argentine peso will decrease by 50%, from 400 pesos to 800 pesos to the U.S. dollar.
“For a few months, we’re going to be worse than before,” Caputo warned.
Milei maintained that the nation did not have any time to consider other alternatives.
Four out of ten Argentines currently live in poverty and the country experiences annual inflation of 143%.
Along with a massive fiscal deficit, Argentina owes the International Monetary Fund (IMF) $45 billion, plus $43 billion in trade deficits, and by April, $10.6 billion will be owed to multilateral and private creditors.
According to Caputo, the government is reducing the size of the government by eliminating state employment and canceling all public works project tenders.
In addition, he declared reductions in energy and transportation subsidies, although he did not specify the precise amount or the details.
He claimed that the steps were required to reduce the fiscal deficit, which he said was the “root of all of the nation’s economic issues,” including the rising rate of inflation.
“If we continue as we are, we are inevitably heading towards hyperinflation,” Caputo said. “Our mission is to avoid a catastrophe.”
Since taking office only two days prior to the move, Milei has already met with a number of high-ranking U.S. officials and his economic team has collaborated with the IMF in order to alter the nation’s foreign policy and to boost its economy.
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