Just two days after assuming office, Argentina’s President Javier Milei’s government has initiated a comprehensive ten-point economic reform plan in an effort to rejuvenate the country’s faltering economy. Regardless, investors remain eager for more significant action.
What Happened: Luis Caputo, the Economy Minister, disclosed several measures. These steps include depreciating the Argentine peso to 800 per dollar from 366.5, downsizing the number of ministries, decreasing provincial financing, halting public works, and cutting back subsidies on the energy and transport sectors. The administration also aims to enhance specific social welfare initiatives, reported Bloomberg, on Tuesday.
The government’s proposed reform plan is generally accepted as Argentina’s best path forward. However, investors are anticipating more decisive steps and detailed plans for the implementation of measures that will require congressional approval and could impact Argentine citizens.
Additional details on the government’s plans for spending cuts, monetary policy, and the currency framework were provided by the Economy Ministry shortly after Caputo’s announcement. The plan is to devalue the peso by 2% each month. The proposed spending cuts amount to 2.9% of the nation’s GDP. The Central Bank is slated to announce its monetary policy on Wednesday.
Investors’ reactions to Caputo’s initial plans were mixed, with some commending the measures as a positive beginning while others demanded a more comprehensive plan to address Argentina’s entrenched economic problems.
Why It Matters: Javier Milei, a pro-Bitcoin BTC/USD leader, was sworn in as Argentina’s new president on Sunday. Milei painted a bleak picture of Argentina’s economic condition, acknowledging his inherited hyperinflation crisis and projecting potential inflation rates reaching a staggering 15,000%.
Amidst this backdrop of relentless economic and political turmoil, Milei’s inaugural address signaled a deep rupture with immediate and historical precedents. His administration’s new reform plan is seen by some as an initial step towards steering the nation out of its economic crisis.
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