Argentina will issue again quasi-currencies after more than two decades. The Legislature of the province of La Rioja, in the northwest of the country, approved this Wednesday the creation of the Debt Cancellation Bonus (Bocade), a financial tool that the province will use to pay a portion of the salaries of state workers. The issue, for 22.5 billion pesos, challenges the adjustment imposed by the national Executive by the Government of Javier Milei. Argentina has already resorted to this instrument in the past: during the crisis that began in 2001, when the country abandoned the parity between the peso and the dollar, some provinces and the Nation issued quasi-currencies for the payment of current expenses.
The initiative was promoted by Peronist governor Ricardo Quintela and endorsed by a parliamentary majority in extraordinary sessions. The provincial government assured that the quasi-currency It will be used to pay up to 30% of the salary of public Administration employees. The voucher can be used within the borders of the province for payment in businesses or taxes and can be exchanged for Argentine pesos in the provincial bank, as provincial government officials clarified this Thursday.
Two decades ago, Argentina already resorted to this financial tool to assume current expenses during the economic crisis that began in 2001. With the end of the Convertibility Law, which during the nineties maintained a fixed equivalence between the Argentine peso and the US dollar, the Nation and some provinces issued quasi-currencies such as Patacon, which operated in Buenos Aires until 2003, or Lecop, a bond issued by the national government. The context was different because the crisis was more serious and, at that time, there was a lack of pesos in the Argentine economy.
The issuance of this quasi-currency It will allow La Rioja to finance an expense—in this case, the payment of salaries—without having to adjust, explains Juan Manuel Telechea, director of the Institute of Labor and Economy. “It is a useful tool in the short term to be able to pay salaries because obviously [la provincia] “It does not have enough resources,” says the economist. The Quintela Government thus challenges the adjustment imposed by the Milei Cabinet, which as soon as it arrived at the Casa Rosada devalued the currency by more than 50%, and intends to cut public spending by 5%, which will be achieved in part by reducing transfers to the provinces.
Telechea, however, warns that in the medium term payment with quasi-currency It can depreciate the salary of state workers because the value of the bonus will depend on the demand that exists on the Bocade. “The more establishments that accept the bonus, the more likely it is that the value will be parity with the peso. But if for some reason businesses do not accept it or accept it at a discount, there will be people harmed,” says the economist. If the latter happens, Telechea points out, there will in practice be an adjustment to the salaries of the people who receive this bonus.
The Quintela Government appeals to “trust.” “We are forced into this by the speed, the savagery, the cruelty of the adjustment that was precipitated in 20 days. “When people went to collect their salaries, they didn’t make ends meet,” Quintela said in a radio interview. “It turns out that the problem is created by the Nation and the province has to provide answers,” Quintela concluded. The governor demands payment of 9.3 billion pesos that the national Executive supposedly owes the province since October. According to Quintela, Milei “turns a deaf ear” to his request. “We believe that there cannot be an adjustment plan without a containment plan,” Quintela wrote on the social network X (on Twitter).
Milei reacted to La Rioja’s decision from the World Economic Forum in Davos (Switzerland). The ultraliberal celebrated in a message on the social network X: “Welcome the provincial currencies to the competition.” Milei clarified in that same text that it is not even quasi-currency nor any other that may arise “will be rescued” by the national government as “happened in the past.” Hours later, the presidential spokesperson, Manuel Adorni, issued a “technical opinion” to the challenge posed by the province: “If one spends more than what he has and does not have other elements nor does he want to adjust, the quasi-currency “It will see the light within the assessment that each citizen makes of that role.”
La Rioja, governed by Peronism, has been the first and only province to approve the issuance of a quasi-currency since the beginning of Milei’s mandate and can set a precedent for other provinces to follow that path. In recent weeks, the possibility has emerged that the Government of the province of Buenos Aires, also Peronist, will issue a quasi-currency. “For now we are not moving forward in that direction, but the Constitution enables it and we consider that it is a tool that can alleviate a certain liquidity or credit deficit in the province,” said Carlos Blanco, Minister of Government of Buenos Aires.