Devaluation of the peso, reduction of transport and energy subsidies, cancellation of public works tenders: Milei government announces fiscal adjustment

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The announcement was the most anticipated measure from the new government to contain hyperinflation, at around 140%, and combat poverty levels, which already affect 40% of the population. Luis Caputo announces the package of economic measures for Argentina 12/12/23 Reproduction/Ministerio de Economy de Argentina The Argentine government announced this Tuesday (12) its first fiscal package to try to contain the economic crisis, one of the worst in history of the country that plunged Argentina into a spiral of hyperinflation and increasing poverty. ✅ Click here to follow the g1 international news channel on WhatsApp In a 17-minute video speech, previously recorded, the new Economy Minister, Luis Caputo, announced a series of fiscal adjustments. These measures include: Do not renew employment contracts that are less than one year old. Suspension of government advertising for one year. Reduce the number of secretariats from 106 to 54, and ministries from 18 to 9 (already announced). Reduce transfers to the provinces to a minimum. The country will no longer issue public works tenders and cancel tenders for works that have not yet started. Reduce energy and transport subsidies. Strengthen social policy for those who need it most, increasing social benefits for the low-income population. The exchange rate for the peso in relation to the dollar will be worth 800 pesos (currency devaluation). This includes increasing taxes on imports and suspending non-agricultural exports. Replace the import system with one that will not require prior licensing information. “We are in the worst phase in our history,” said the minister, who said that Argentina spends much more than it collects — the fiscal deficit. “If we continue as we are, we will have hyperinflation.” The idea, he says, is to “neutralize the crisis.” The package was the most anticipated measure from the new president, Javier Milei, who, during his campaign, promised deep cuts in the state structure. In his inauguration speech on Sunday (10), Milei said that “there is no money” in the country and asked the population to prepare for difficult times before the situation improves. The Argentine press speculated that the new government would announce not only the package, but the government’s adjustment plan. Argentina is experiencing one of the worst economic crises in its recent history, with 40% of the population living in poverty and inflation exceeding 140% annually. Milei has said that the cut in public spending will be equivalent to 5% of the country’s Gross Domestic Product (GDP). Earlier, the Argentine government spokesman, Manuel Ardoni, had already spoken of “a strong fiscal cut”, with a focus on social revenues, and stated that the package designed by Caputo and Milei aims to “avoid a greater catastrophe”. . “We understand that the situation is serious and we are aware that the situation could be worse”, declared Adorni. In the morning, the spokesperson also announced that, for one year, all government statements to the press will be made via recorded videos, which will be shown to journalists in a room at Casa Rosada without the possibility of questions. SANDRA COHEN: Milei’s veto on the press during the inauguration of ministers raises the alarm in Argentina Cutting ministries in half On Sunday (10), shortly after being sworn into office, Javier Milei signed a decree, the first of his administration, reducing the number of ministries in his country is nine, half of what his predecessor, former president Alberto Fernández had. The ultraliberal government will therefore have the following portfolios: Ministry of Interior; Ministry of Foreign Affairs; Ministry of International Trade and Worship; Defense Ministry; Ministry of Economy; Ministry of Infrastructure; Justice ministry; Ministry of Security; Ministry of Health and Human Capital. According to Milei, the measure is the first to cut public spending, one of the flags he raised during his inauguration speech. “There is no solution without attacking the fiscal deficit. The solution implies an adjustment in the public sector, which will fall on the State, and not on the private sector,” he said. End of home office and review of positions On Monday (11), on his first day of work at the head of the country, Milei ordered the end of home office in the civil service and a review of government positions and contracts. At the meeting, which took place at Casa Rosada, the government headquarters, Milei ordered ministers to adopt a 100% face-to-face work requirement for all members of their portfolios. The president, his second vice, Victoria Villaruel, also asked for a “general inventory” of all public servants and commissioned positions, in addition to a survey of all contracts in force in the ministries. The announcements generated fear in the country of mass layoffs and dismissals in the civil service throughout the day, according to the local press. READ MORE: PHOTOS: See images of Milei’s inauguration ‘VIVA LA LIBERTAD, CARAJO’: At the inauguration, Milei writes ‘expletive’ in the Congress book; understand why words are less weighty in Argentina INFLUENCE ‘UTOPIAN’ LIBERTARIAN OR PRAGMATIC: Which Milei will govern Argentina? Milei stated that, in the short term, the situation should worsen until the first measures begin to produce results. And he reiterated that the government has no money: “Regrettably I have to say, ‘no hay plata’.” “This will negatively impact activity, employment, the number of poor and indigent people. There will be stagflation [situação em que há estagnação da economia e inflação alta], but it is something very different from what we have had in the last 12 years. It will be the last bitter drink to begin rebuilding Argentina,” he said. “It will not be easy: a hundred years of failure do not undo in a day, but one day it begins, and today is that day.” The Argentine president spoke on the steps of Congress , to his voters. It was a breach of protocol, because normally this speech takes place inside parliament. Later, at the Casa Rosada, he spoke to the public again and said that his election represents “the end of the populist night and the rebirth of Argentina prosperous and liberal”. Among the authorities who participated in the inauguration were former president Jair Bolsonaro and the president of Ukraine, Volodymyr Zelensky. President Lula did not go to Buenos Aires and sent his chancellor, Mauro Vieira, to represent Brazil. Inflation In his inauguration speech, Milei also mentioned the high inflation, above 140% per year, and attributed the blame to the Peronist governments. Before Alberto Fernández, who leaves office now, the one who governed was Mauricio Macri, who is right-wing and an ally by Milei. Before Macri, Cristina Kirchner “They ruined our lives and made our salaries fall tenfold. Therefore, it should not be surprising that they are leaving 45% poor and 10% destitute.” “Argentineans, in a forceful way, expressed a desire for change that has no return. There is no return. Today we buried decades of failures and senseless disputes. Fights that only managed to destroy our country and leave us in ruins. Today begins a new era in Argentina, of peace and prosperity”, he stated. Milei receives the presidential baton from Alberto Fernández, another symbol of power in Argentina Natacha Pisarenko/AP

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