Argentina’s new government under President Javier Milei plans to devalue its currency by over 50% against the US dollar as part of an “economic shock therapy” to address the country’s severe crisis. Economy Minister Luis Caputo unveiled substantial cuts in public spending, targeting subsidies for fuel and transport, and freezing specific government contracts and advertising expenditures. Caputo, acknowledging the grim economic legacy inherited, emphasized the necessity of these measures to prevent hyperinflation. The country faces challenges with soaring inflation, a high level of government debt, low reserves, and a significant portion of its population living below the poverty line. The International Monetary Fund (IMF) praised the bold steps taken, expressing optimism about fostering an environment conducive to private sector growth. Caputo announced a drastic exchange rate adjustment, reducing the value to 800 pesos per US dollar from the previous 391 pesos, undoing the country’s practice of maintaining an artificially strong currency since 2019. President Milei, a libertarian, campaigned on promises of substantial spending cuts and swiftly implemented measures to address economic concerns upon taking office.

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