The government of Argentina’s ultra-liberal new president, Javier Millay, who took office the day before Sunday, announced a major devaluation of the peso, the national currency, by more than 50%, at 880:1 against the US dollar (from 391). , as part of a package of harsh austerity measures, a “shock” treatment to stabilize the economy, which is facing high inflation, high public deficits and unsustainable government debt.

The devaluation of the peso is part of “emergency” measures announced by new Economy Minister Luis Caputo, including big cuts in state subsidies for energy and public transport prices.

These measures, presented by the Minister of Economy at a press conference, are intended to avoid the “disaster” that hyperinflation would bring, which according to Mr. Caputo could reach 15,000%.

“The genesis of our problems has always been financial”, argued Mr. Caputo, judging that for the first time, by voting for Javier Millay, the citizens of Argentina showed that they understood that “there is no money”.

“We spend more than we make. Financing this deficit leads to problems. If you finance it by printing money, the peso loses value. We will deal with the problem at the root. We must cure the dependence on fiscal deficits,” he insisted.

In the first instance, which the minister seemed to acknowledge, the devaluation of the peso and the reduction of public transport and energy subsidies will inevitably hit the purchasing power of a large part of the citizens, 40% of whom live below the threshold poverty.

Taking into account this fact, the Minister of Economy assured that the government will maintain social programs to facilitate access to jobs and that it will strengthen aid programs “to those who need it, without intermediaries”, for example with “feeding cards” (which will ensure the purchase of goods at reduced prices).

President Millay made it clear on Sunday, in his inauguration speech, that “the situation will worsen in the short term” before Latin America’s third-largest economy reaps the rewards of the austerity policies he intends to implement, notably bringing inflation under control (143% in annual base).

The finance minister also announced that the state will no longer organize tenders for public works and will cancel contracts for those “that have not already started”. Public works will be carried out by the private sector “as the state has neither the money nor the funding” for them, he said.