New Argentinian government devalues national currency by more than 50 percent
Caputo also announced a reduction in subsidies for energy and transport. The state is keeping prices in these sectors artificially low through subsidies, said the minister. "But these subsidies are not free, we pay for them with inflation." Caputo warned: "If we continue as before, we are inevitably heading for hyperinflation."
The minister also announced that no more new public construction contracts should be awarded. Contracts that have already been awarded and whose project implementation has not yet begun should be canceled. Infrastructure projects should be funded by the private sector in future, said Caputo. In the case of public projects, the money would often end up "in the pockets of politicians" anyway.
In principle, the Argentinian state must overcome its "addiction" to spending more money than it takes in, said Caputo. Argentina had recorded a deficit in 113 of the past 123 years.
President Milei had announced painful austerity measures when he took office on Sunday. In view of empty state coffers, "shock therapy" was unavoidable, said the right-wing populist, ultra-liberal political newcomer. The 53-year-old is taking over the South American country in the midst of a severe economic crisis: inflation has risen to more than 140 percent and more than 40 percent of the population live in poverty.
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- The new Argentinean government, led by President Milei, believes that continuing the current spending habits will lead to hyperinflation, which is over 140 percent at the moment.
- Minister Caputo evaluated that the nation's addiction to overspending, seen in Argentina's 113 deficit years out of the last 123, must be overcome.
- In line with these austerity measures, Caputo announced a reduction in subsidies for energy and transport, acknowledging that they contribute to inflation.
- Caputo also decided that no new public construction contracts should be awarded and those already awarded but not yet started should be canceled, as infrastructure projects are often mismanaged and lead to corruption.
- From now on, private companies should fund infrastructure projects to avoid political corruption, according to Caputo's plan.
- Luis Caputo, the minister, stated that the government would evaluate new policies to combat inflation to the tune of more than 50 percent, given the devaluation of the Argentinean national currency.
- In a significant move, Caputo advised that the government should aim for a more balanced budget, aiming to minimize inflation and stimulate economic growth.
Source: www.stern.de
