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Argentine Finance Minister Announces Brutal Austerity Package, 54% Devaluation

In a taped message to the nation tonight, Argentina’s Finance Minister Luis Caputo announced the package of austerity measures that President Javier “Chainsaw” Milei had promised in his inaugural address Dec. 10. Originally scheduled to air at 5:00 pm, Caputo’s speech had to be taped a second time after the first run was vetoed, presumably by Milei. It finally ran at 7:00 pm to a national audience that had waited for two hours to hear the bad news.

Caputo, who was finance minister for the hated Mauricio Macri in 2018-2019, premised his announcement by telling Argentines they were living in a catastrophic crisis, the worst in history, “there is no more money,” etc., so they must be prepared for really difficult times. At the top of his list was the announcement of a 54% currency devaluation, which would fix the peso—now at 366/dollar—at 800/dollar. All subsidies on energy (electricity, gas, water) and transportation will be removed, although funding for social welfare programs will increase, but that will probably not make much of a difference to people’s daily lives.

The reduction in the number of ministries, from 19 to 9, had been previously reported; the number of secretaries (a position which in Argentina is like a deputy minister or under-secretary) has been reduced from 106 to 54, and “excess” personnel will be fired. Bidding on all public works is suspended, and projects for which bidding is completed but which haven’t yet started, will be suspended. Public works have always been a source of corruption in Argentina, Caputo said, so now they will be built by the private sector. Discretionary monetary transfers to the provinces will be reduced to the minimum. Taxes on imports and on non-agricultural exports will be increased.

These are not all of the measures. More are to be announced tomorrow, but the IMF has already expressed its full support for them. IMF Managing Director Kristalina Georgieva wrote on X: “I welcome the decisive measures announced by President Milei and his economic team today … an important step toward restoring stability and rebuilding the country’s economic potential.” IMF Communications Director Julie Kozack also welcomed the package, saying it would go a long way toward “stabilizing public finances.”