December 13, 2023
The Minister of Economy Luis Caputo has provided details of an “economic urgency” package, a euphemism to include adjustment measures, devaluation and inflation increase. Prices skyrocketed before the speech to between 100% and 150%.
The Minister of Economy has announced a war plan against the working people of Argentina, with measures such as the increase of the official exchange rate, dismissal of state workers, and reduction of subsidies for public services. President Javier Milei lied in the electoral campaign when he said that he would adjust to the political strata.
Caputo listed the following measures to be taken:
-Non-renewal of State labor contracts with less than one year in force.
-Suspension of advertising for one year (the Minister of Economy said that $34,000 million were spent on advertising in one year). Ministries are reduced from 18 to 9 and State Secretariats from 106 to 54.
-To reduce to a minimum “discretionary transfers from the national State to the provinces”. No more new public works will be tendered.
-Reducing subsidies to energy and transportation. This implies an increase in the rates of public services. Another blow to the pocket.
-Maintain the plans “Potenciar Trabajo” according to the Budget 2023.
-Devaluation, official exchange rate rises $800 and PAIS tax hike. “We are going to lock in the official exchange rate that is going to go to $800 so that the productive sectors have the right incentives to increase their production. It will be accompanied by a temporary increase of the country tax on imports and non-agricultural exports”, said Caputo. While the official rate means that $800 pesos will now exchange for $1 USD the exchange on the street is expected to soar over 1500. Already sources are saying that the price of beef shot up 43% in one day.
“After the emergency, we will move forward in the elimination of all exploitation duties, a perverse tax that we do not like and that hinders Argentine development”, added the Minister of Economy.
-SIRAs will be eliminated. That is to say, it will be possible to import without authorizations. “They will be replaced by a statistical and information system that will not require prior approval of licenses. Discretionality will end. Whoever wants to import will be able to do so, period,” said Caputo.
-The amount of the Universal Child Allowance and the Food Card will be doubled by 100%. But inflation will be higher than this percentage.
Excerpts from Caputo’s Speech
“We are facing the worst inheritance in our history. A country where Argentines are getting poorer and poorer, with a fiscal deficit that exceeds 5.5 points of product. With a Central Bank with an absolutely deteriorated imbalance sheet. With no dollars in its assets. A monetary emission in these four years of more than 20 points of product, which has caused inflation to currently sail at 300% per year and punish Argentines every day.”
“Repressed prices in energy, in tariffs, in the dollar that are being paid between half and one fifth of their real value. Debts of more than 400 billion dollars, between BCRA liabilities, treasury debt, debts with importers, retained earnings, debt with multilateral credit organizations”.
“If we continue as we are, we are inevitably heading towards hyperinflation. We can, as the President said, reach levels of 15 thousand percent per year. To make you understand what this means, we are talking about a milk going from being worth 400 pesos to 60 thousand pesos in the span of a year.”
“Our mission is to avoid this catastrophe”.