Argentina devalues peso by 50% in shock economic move
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 has made a bold move by significantly devaluing its currency and implementing cuts in subsidies for energy and transportation. According to President Javier Milei, these 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 emphasized that there was no time to consider alternative solutions.
With four out of ten Argentines living in poverty and an annual inflation rate of 143%, the country is facing significant economic challenges. Additionally, Argentina owes the International Monetary Fund (IMF) $45 billion, along with $43 billion in trade deficits and $10.6 billion to multilateral and private creditors by April.
To tackle these issues, Caputo announced the reduction of state employment and the cancellation of public works project tenders. He also mentioned cuts in energy and transportation subsidies, although specific details were not provided.
Caputo stated that these measures were necessary to address the fiscal deficit, which he believes is the root cause of the nation’s economic problems, including the rising inflation rate.
“If we continue as we are, we are inevitably heading towards hyperinflation,” Caputo said. “Our mission is to avoid a catastrophe.”
Since taking office just two days ago, Milei has already engaged with high-ranking U.S. officials and collaborated with the IMF to reshape Argentina’s foreign policy and boost its economy.
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What are the specific economic measures that Argentina has implemented to address its crisis, including the devaluation of its currency and subsidy cuts?
Argentina Implements Bold Economic Measures to Address Crisis
Argentina has recently announced a significant devaluation of its currency and the implementation of cuts in subsidies for energy and transportation as part of an economic shock measure. President Javier Milei believes that these 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. Caputo warned that this move would lead to some difficult months ahead for the country.
Milei emphasized the urgency of the situation and the need for prompt action. With four out of ten Argentines living in poverty and an annual inflation rate of 143%, Argentina is facing significant economic challenges. The country also owes a staggering amount to various creditors, including $45 billion to the International Monetary Fund (IMF), $43 billion in trade deficits, and $10.6 billion to multilateral and private creditors by April.
To tackle these issues, Caputo announced the reduction of state employment and the cancellation of public works projects. He also mentioned cuts in energy and transportation subsidies, although specific details were not provided.
Caputo stated that these measures were necessary to address the fiscal deficit, which he believes is the root cause of the nation’s economic problems, including the rising inflation rate. His goal is to avoid a catastrophe and prevent the country from heading towards hyperinflation.
Since taking office just two days ago, Milei has already engaged with high-ranking U.S. officials and collaborated with the IMF to reshape Argentina’s foreign policy and boost its economy. These efforts indicate a proactive approach to address the economic crisis.
It is evident that Argentina is facing a severe economic situation, and these bold measures are seen as necessary steps towards stabilizing the economy. However, the success of these measures will only be determined in the coming months as the country navigates its way out of the crisis.
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