Emergency austerity measures by incoming President Javier Milei to curb inflation in Argentina have been approved by the International Monetary Fund, but the government acknowledges short-term pain.

In a bold move to address Argentina's deepening economic crisis, President Javier Milley's government has devalued the country's currency, the Argentine peso, by 50 percent.

The radical measure, announced on Dec. 12, marks a major shift in the country’s approach to tackling long-standing financial problems.

Argentine peso depreciates by 50%

The peso will plunge from 400 to more than 800 per dollar as part of a broader economic reform strategy.

Economy Minister Luis Caputo outlined other austerity actions, including deep cuts in subsidies, a halt to public works tenders and the consolidation of government departments, and said the “painful” measures were necessary to “avoid the catastrophe of severe hyperinflation”.

At the same time, the government is doubling social spending to cushion the poorest from the impact of these draconian measures. In a candid televised statement, Caputo acknowledged the immediate hardship these changes will bring, saying:

"We're going to be in a worse situation over the next few months than we were before. Especially with inflation."

IMF approves measures

The International Monetary Fund (IMF), which provided Argentina with a $45 billion loan in 2022, praised the new measures, which follow guidelines set by regulators in the loan.

Regulators have also urged the government to crack down on the use of cryptocurrencies in the country, which has increasingly turned to Bitcoin and other digital assets as a hedge against economic crises.

More than 10% of the population used cryptocurrencies in some form by the end of 2022. Many in the country hope that Milei, who has expressed a positive stance on Bitcoin, will be able to legitimize the industry.

However, the newly appointed president has yet to take any official action regarding Bitcoin as part of his economic policy since taking office. His administration is focused on addressing Argentina’s dire economic crisis, stressing the need for immediate action and preparing the country for major austerity measures.

Milley, who took office this month, has advocated strict austerity policies to steer Argentina toward economic stability. His approach, often described as "anarcho-capitalism," is a marked departure from gradualist policies and focuses instead on drastic adjustments to the state sector.

Despite Millay’s unorthodox approach, Argentines tired of soaring inflation and a staggering 40 percent poverty rate appear to be increasingly accepting of it.Yet daunting challenges remain.

Milley's plan will face strong resistance, particularly from the influential left-leaning Peronist movement and its associated unions, which are adamantly opposed to cutting their members' wages. #比特币  #阿根廷