Argentina: Inflation at 161 percent! New government causes turbulence with devaluation and austerity measures - IMF gives the green light

Argentina: Inflation at 161 percent! New government causes turbulence with devaluation and austerity measures - IMF gives the green light

According to a report by www.fr.de,

The new President Javier Milei is cutting Argentina's government spending and the peso is being devalued. There is praise from the IMF for this.

The Argentine economy is being shaken by drastic measures taken by new President Javier Milei. In a first official act, Milei announced plans to cut public spending by $20 billion, which is likely to lead to a rise in inflation and aggravation of the country's economic problems. These measures are expected to lead to a further decline in GDP in 2024, and the already high inflation rate of 142 percent will continue to increase. In addition, poverty in the country is expected to rise sharply, which could lead to social unrest.

The devaluation of the peso will improve the competitiveness of Argentina's exports, but at the same time make imports more expensive, which could further increase inflation. The announced cuts in public spending are expected to lead to mass layoffs in the public sector and could further increase tensions among the population.

The reaction of the International Monetary Fund (IMF) to President Milei's measures was surprisingly positive, as the IMF welcomed the measures as a step towards stabilizing the economy and strengthening the exchange rate system. However, uncertainty remains over how the government will curb persistent inflation without increasing social hardship.

Overall, the economic situation in Argentina is expected to remain unstable due to the announced measures and the coming months are expected to be turbulent.