Decree Crisis: Understanding the Economic Measures Implemented by President Javier Milei in Argentina

2024-01-17 00:03:00

Just 48 hours following taking office, Milei, through his Minister of Economy, Luis Caputo, announced ten “emergency measures” to address the economic crisis. Among them stands out “a brutal devaluation of the peso, which lost half of its value once morest the dollar in a single day.”

Thousands of Argentines protest once morest the emergency decree of President Javier Milei on December 27, 2023.


It was on December 10, the date on which he offered his first speech as head of state, that Milei said that he would apply a harsh adjustment and that there would be “stagflation” (economic stagnation and high inflation) for several months, but he promised that “this will be the “last bad drink” before the “reconstruction” of the South American country.”

“Unfortunately I have to say it once more: there is no money. The bottom line is that there is no alternative to adjustment and there is no alternative to shock,” he said then.

Towards the end of the same month, the libertarian sent to the Argentine Congress an “omnibus law” – or project with many laws – that makes up the third and final part of the liberal reform plan with which he plans to “give a turning point in Argentine history.” ”. Days before, he had already presented a broad austerity plan, which includes the elimination of subsidies for transportation and public service rates and paralyzes the construction of infrastructure works financed by the State.

The response from the population has been mixed; Some Argentines see it as a necessary evil to get out of the “hole” they have been in for decades. Other citizens prefer to express their rejection by marching with cacelorazos.

Women, members of social organizations, protest once morest Javier Milei’s megadecree and ask for support for soup kitchens.


New prices and a dollar worth twice as much

The measures proposed and imposed by Milei devalued the Argentine currency by more than 50% in December, as we said above. Thus, the official exchange rate went from 400 to 800 pesos and the blue dollar exceeded 1,000 pesos.

According to the Argentine Minister of Economy, Luis Caputo, the country’s underlying problem is the “fiscal deficit”, that is, “when more is spent than is collected”, something that Argentina has done for more than 100 years.

“What manifests itself as the problems” – he said in reference to inflation, debt and the constant appreciation of the dollar – “are actually the consequences of how that deficit has been financed.”

That is to say, Argentina has survived by borrowing money, printing more banknotes, and, in Caputo’s words, “it has not attacked the root of the problem”: excessive spending.

This new devaluation is therefore causing the increase in prices of essential products, frozen in the past by the governments in power and which now reveal their true value. The problem is that everything is costing more, the currency is devaluing and salaries are not growing.

A woman counts money at the Central Market in Buenos Aires, January 9, 2024.


The Argentine crisis, a magnet for tourists?

Despite its long crisis, Argentina has long been an attractive country for many foreigners, especially students who see in this country the opportunity to develop professionally, something that they have not found in their places of origin, all thanks to the free education and the devaluation of the peso.

It also happens with tourists, who, dollar in hand, find everything “cheaper” than in their own countries.

According to the latest data from the National Registry of Persons (Renaper), of the 46,044,703 people who live in Argentina, more than three million are foreigners with Argentine residence.

Regarding the number of foreigners who visited the country in November 2023, this increased by 43.5% year-on-year, up to 1,207,900 people, of which more than half were tourists, reveals an official report from the National Institute of Statistics. and Censuses (Indec).

Javier Milei gestures as he speaks to the crowd from a balcony of the Casa Rosada government palace during his inauguration day in Buenos Aires on December 10, 2023.


How does the rise of the Argentine dollar affect Peruvians?

“In the face of this uncertainty, it is attractive for people, in the event of any eventuality, to find refuge in a stable currency like the dollar. It happens in Argentina, also in Peru. And in the face of this great demand, the US currency tends to rise in price. Here the question is whether prices follow this upward trend of the dollar and the answer is that they are slower. Therefore, for the foreigner and for the Peruvian who is thinking regarding traveling to Argentina with dollars, it is a good time,” Marco Ortiz, professor and researcher at the Research Center of the Universidad del Pacífico tells us in an interview with El Comercio.

“Now, what is also important to mention is that this adjustment is not only important for anyone who wants to visit Argentina but for anyone who wants to import from there. This also helps make the Argentine shock easier to overcome because when external demand increases or the number of tourists increases, they will leave foreign currency in the country that will help the country gradually normalize,” he adds. Ortiz.

For the Peruvian economist, this shock imposed by Milei is very strong in the short term. “These packages normally have a very important aid package because we know that in this market correction, many people are going to be left on the streets. This is a necessary step that Argentina had to make in order to get out of that unsustainable crisis that, if it continued on the same path, was going to end with an even worse crisis.”

Living the crisis from within

For Martin Vaisman, Argentine audiovisual director and sound engineer, the short-term future is not as positive as it is for Ortiz. “We were already doing badly before, what Sergio Massa (Alberto Fernández’s economy minister) did was subsidize gasoline and a lot of things so that basic services would not go up and there was also like a whole system of subsidies for a basket basic food of some products, so you were going to buy milk, bread, cookies, noodles and things like that and it was not expensive. With Milei in power, this is over, prices were released because ‘there is no money’. Meat, for example, rose 100% in a month, and nothing, we are all seeing how to continue, how to live while adjusting expenses. As the dollar rises, everything technological is doubled. A car costs twice as much, fixing a computer costs twice as much. As I work in audiovisuals, I have to rent my equipment and it now costs me twice as much.

Related Articles:  The Ganjar-Mahfud camp ensures that the Amicus Curiae cannot intervene in the Constitutional Court's decision - 2024-04-21 14:03:54

How to deal with this?

The answer, for now, is to lower expenses. “I had comprehensive car insurance and now a cheaper one. If you have health insurance, perhaps you downgrade to a lesser plan. There are people who pay with a credit card at the end of the month, so the inflation of the month is very high, at least you earn it with the products, eating less meat, the people who went on vacation for 15 days now do it. makes for 10″, he points out.

Vaisman regrets that, just as in Peru, there are no new politicians who propose urgently necessary but at the same time more equitable solutions. At the same time, he criticizes the Argentine president’s lack of social sensitivity. “He has very little empathy with people who don’t have money. People have been bad for several years in Argentina, it’s not that everything has gotten bad now and that is what gives Milei a bit of air because he says: ‘these changes have to be made because the caste (as he calls the politicians as always), I never want to adjust and adjust on the people; and he says that what he is doing is to adjust to the caste but that is a lie. On the other hand, he has the urge to do it quickly because he has a certain validation because he just won the elections. I think that in six months Milei will fall apart because the adjustment is brutal. Retirement is going to have to hit her and middle class families are going to have to help her parents, subsidies and all that are going to crumble. Six months from now, this is going to be abuzz, in fact a first national strike has already been declared for January 24.”

In that sense, Ortiz maintains that although the reforms promoted by Milei would lead to positive change in the face of the crisis, everything will depend on how and how much popular support can be maintained in the face of this shock, uncertainty and regulations. “It is a complex scenario, the truth is that at the end of the day many people who are hungry can move the needle in terms of support for what the Argentine president is doing. The trance is painful and Argentina has to do everything possible so that vulnerable people do not fall into problems of destitution.”

What is the difference in the prices of products and services?

And while the life of the average Argentine seems to be going uphill right now, as Ortiz pointed out above, it is a good time for the Peruvian or foreigner to travel to the neighboring country due to how “cheap” the price of services such as food can be. or transportation and not, goods such as sneakers or some “branded” clothing.

However, on this topic, Ortiz clarifies that a very important point must be taken into account: that there are two types of goods: tradable and non-tradable.

“TRADABLES are, for example, sneakers, televisions, cell phones, watches and NON-TRADABLES are taxi services, hairdressers, food and goods that can only be consumed in the country. The prices of tradable goods always fluctuate very close to each other, regardless of the country in which they are located, that is, they maintain the same value, no matter how much the local currency rises, so buying an iPhone, a pair of sneakers or a tablet does not bother you. It will not be profitable at all. In the case of non-tradables, the opposite happens, so eating and traveling will be very economical.”

Below is a price list from the Argentine supermarket COTO (Valid from January 15 to 21) and the appliance store FRÁVEGA.




(change to official dollar)

PRODUCTWEIGHTSDOLARSSOLES1 KG of GRILLED STEAK$4499.90US$ 5.59EL BUEN CORTE Beef Grilled Steak/ 1.3 kg approx/Plaza See S/ 49,901 tuna in pieces$1599.90US$ 1,985.30 soles approx.1 liter of boxed milk$855US$ 1.06S/ 5.80 (Milk Gloria)1 Coca Cola$844.44US$ 1.04S/. 4,501 whole chicken$4,990US$ 6.20Between S/ 13.90 to S/. 16.90




(change to official dollar)

PRODUCTWEIGHTDOLLARSSOLESPUMA Sneakers – Model CA Pro OW$112799.00US$140.29S/. 510.06iPhone 15 PLUS$654,147.97US$ 800S/. 2957.92Adidas Sneakers – Model AVRYN$87,499US$ 107.01S/. 395.66Samsung 50″ 4K UHD Smart TV UN50AU7000$582,999US$582S/. 2151.89AirbnB Hostel accommodation via BookingBetween 86 to 110 soles per night, approx.
Palermo, Argentina
2 guests
· 1 bedroom
· 1 cama
· 1 bathroom
93 soles per nightSingle room with private bathroom
Price for 5 nights
S/ 1.752

Returning to the question, how convenient is it for Peruvians to travel to the neighboring country? That will depend on your possibilities, but yes, keep in mind that this week’s prices may not be the same in seven days or a month.


Currently, there are 8 types of dollars in Argentina.

Thus, for example, there is the official dollar, which is the one with which export and import operations are carried out.

Then there is the blue dollar that doubles it; It is the benchmark of the street, the illegal dollar that some media outlets call informal with a euphemism.

The tourist dollar, which is what tourists buy. There is a Qatar dollar, which was the rate with which the card expenses of the Argentines who went to the World Cup were managed.

The luxury dollar is for luxury goods that are purchased from Argentina. There is a soy dollar for soybean producers.

The liquid dollar, which are bank reserve dollars.


(Change as of January 15, 2024)

Official dollar: Purchase: $804,36 Sale $863,62

Dolar blue: Purchase $1085,00 Sale $1135,00

Tourist dollar: Sale $1381,79

Dollar card: Sale $1381,79

MEP Dollar: Sale $1122,70

#Peruvian #Argentina #magnet #tourists #convenient #Peruvians #travel #neighboring #country #Dollar #double #inflation #overflowing #good #time #travel #tourist #exchange #rate #taxi #services #hairdressers #food #ANSWERS

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.