Free Trial

First Steps of 'Shock' Therapy Detailed by Caputo


Milei's government detailed the first steps of his 'shock' therapy to rejuvenate the Argentine economy, outlining sharp spending cuts and an overhaul of the FX regime - this was broadly as expected. The policy highlights include:

  • A ~50% devaluation of the ARS, putting USD/ARS to 800. This will be facilitated by a crawling peg arrangement, meaning the BCRA will allow for 2% devaluation per month. This will remain the 'official' exchange rate, however black market rates have already reached as high as 1,000 in the wake of Milei's election.
  • Sharp spending cuts equating to 2.9% of GDP, aimed at eliminating the primary fiscal deficit entirely in 2024. Measures include cutting by half the number of government ministries and suspending public works programs that are yet to break ground.
  • In response, the BCRA have lowered their 1-day repo rate to 100% from 126%, but have confirmed the LELIQ key rate is unchanged at 133%, and will evaluate options for international financing.
  • Blunting the impact for those on lower incomes, welfare programs get a boost, with the Universal Child Benefit and Food Benefits both increased.
  • Inflation data due later today is expected to show national CPI rising to 155% from 143%, a new series high.
MNI London Bureau | +44 203-865-3809 |

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.