2023-12-13 02:05:26
It devalued the Argentine peso by 50% and the “exchange stocks” remain in place.
The Minister of Economy of Argentina, Luis Caputo, announced this Tuesday through a recorded message the axes of the economic policy that the Government of President Javier Milei will carry out.
Caputo provided details on the application of an economic emergency package to avoid a “catastrophe”, a series of 10 stabilization and reduction measures in public spending, with the aim of avoiding hyperinflation and recovering fiscal balance.
As he explained, Argentina’s main economic problems are debt, high inflation, fiscal deficit and exchange rate instability.
“Our mission is to avoid a catastrophe. For that we have to recognize the genesis of this problem, and it is the fiscal deficit. The deficit is when more is spent than what is collected,” said Caputo and exemplified with the home economy.
However, he acknowledged that in terms of inflation the country will be “a few months worse than before.”
“It is the first time in more than 100 years that a candidate (Milei) explains this, people understand it and vote for him. “We are facing a historic opportunity,” said the minister. And he went on to list the measures.
“Emergency” plan
1 – One of the main policies has to do with the price of the official dollar, whose purchase will continue to be restricted by the so-called exchange rate ‘traps’. As expected, Caputo announced a devaluation of the local currency, since the North American currency is “sincere” at a value of 800 pesos. At the close of this day, the dollar was sold at 400.50 pesos at Banco Nación.
2 – In addition, there will be a sharp reduction in public positions. The ministries that make up the Cabinet were reduced by half, leaving only 9 of the 18 that existed in the previous administration. The same happens with the secretariats, which will go from 106 to 54.
3 – Likewise, “all public administration contracts that are less than one year old will be cancelled,” he explained.
4 – On the other hand, a scheme will begin to remove subsidies from energy and transportation rates in the Metropolitan Area of Buenos Aires. “The State artificially maintains very low prices through subsidies. Politics always tricks people into believing that it puts money in their pockets. But these subsidies are paid with inflation,” Caputo said.
5 – The national State is not going to put out to tender public works and will cancel those that have been put out to tender and have not been executed. “The infrastructure works will be carried out by the private sector, since the State does not have money or financing to carry them out,” said the head of Economy.
6 – The transfer of resources from the nation to the provinces will be reduced “to a minimum.” “Unfortunately in our recent history they have been used as a bargaining chip to exchange political favors,” she argued.
7 – Caputo also ratified the suspension of the official media guidelines for one year, as the presidential spokesperson, Manuel Adorni, had announced hours before.
8 – The minister announced the end of the Import System of the Argentine Republic (Sira), an online electronic instrument that regulates the entry of merchandise from abroad under the orbit of the Federal Administration of Public Revenues (Afip). From now on, prior approval of licenses will not be required. “Discretion ends. Whoever wants to import can do so, period,” he clarified.
9 – Income from social programs such as the Universal Child Allowance will be doubled and the Alimentar Card will increase by 50%.
10 – The Empower Work plans are maintained and efforts will be made to strengthen social policies that go “directly to the people who need it most, without intermediaries.”
“The worst inheritance”
In the morning, Milei led his second meeting of the National Cabinet at the Casa Rosada, with the aim of fine-tuning the details of the measures to confront the economic crisis that the country is going through and that were announced by Caputo.
Already in his first speech to the citizens on Sunday, following taking office, the Argentine president announced that he would make large cuts in public spending, something that already appeared during his electoral campaign.
According to Milei, the inheritance received is “the worst in history”, which is why the objective has been set to reduce spending by 5% of the Gross Domestic Product (GDP), which is estimated at around 20 billion dollars.
“There is no money,” were the forceful words of his first message as president, in which he assured that there is no alternative to adjustment without gradualism. Along these lines, he acknowledged that the first months will be “very hard,” which is why more inflation, poverty and unemployment are expected.
However, he asserted that it will be the “last bad drink” for Argentines, before the long-awaited economic “prosperity” that his Government promises.
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