Daily Management Review

New Austerity Measures Announced By Argentina To Stabilize Its Falling Currency


09/05/2018




New Austerity Measures Announced By Argentina To Stabilize Its Falling Currency
Argentina is all set to get an early release as it had asked for from the International Monetary Fund with respect to the $50bn emergency funding and just before it, the government there has undertaken a range of very significant new austerity measures to prevent further deterioration of its economy.
 
The economic crisis that the country was is facing would need some strict austerity measures to combat it, said Argentina’s President Mauricio Macri, even as the country’s currency the peso dropped further against eth US dollar on Monday. The country has announced significant slashing on spending and increase of export taxes so that its budget deficit could be brought under control.
 
Despite the announced measures are believed to increase the speed of economic reforms in the country, they were not enough to satisfy the international markets which were expecting more. The news of the new measures resulted in a drop of 4 per cent in the3 value of the peso continued. So far this year, there has been an almost 50 per cent drop in the value of the peso against the dollar.
 
The Macri government has attempted to manage the budget deficit for next year by slashing the number of ministries in the government and increasing export taxes. the government also however announced that the increase in the export taxes is only an emergency measure and once the economy stabilizes, they it would be lifted.
 
“This is not just another crisis. It has to be the last”, Macri said during a televised public address where the president visibly tried to shore up international confidence in the country’s currency.
 
There has been significant fall in the value of a number of the emerging market currencies in addition to that of Argentina such as Turkey and South Africa, this year which has put their economies under pressure. The rate hikes undertaken by the United States Federal Reserve so far this year has strengthened the US dollar which has increased the cost of repayment of those foreign debt for these countries that are denominated in US dollars.
 
While admitting that there would be an increase in levels of poverty in Argentina because of the rising inflation which is at 30 per cent – one of the highest in the world, Macri said that his government would also attempt to implement some welfare programs such as aiding the children.
 
Argentina would be able to balance its budget next year by the austerity measures that were announced, said the country’s finance minister, Nicolás Dujovne and perform better than the earlier expected budget deficit of 1.3 per cent of GDP. He said that the target of the government was that by 2020, it should be able to achieve a budget surplus of 1 per cent.
 
(Source:www.theguardian.com)






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