According to new reports, Sergio Massa has promised that Argentina will stop printing money amid the current 60% inflation, which was caused by the Fernández administration’s reliance on money printing to pay off the nation’s escalating fiscal debt.
Sergio Massa, Argentina’s new economy minister, promised to stop printing money hours after taking office in an effort to address the country’s escalating currency crisis, which has already seen inflation reach 60% and is expected to reach 90% by the end of the year.
The Buenos Aires Times claims that Massa’s economic plan also emphasizes increasing exports, decreasing the nation’s fiscal deficit, and replenishing the drastically depleted reserves of the central bank.
Over the past few months, protests have broken out all over the nation as people demand that their center-left government reinstate certain subsidies and reconsider cutting others, like the infamous welfare program, which has expanded to include 22 million Argentinians receiving assistance despite a 43 percent unemployment rate.
Due to the Fernández administration’s reliance on money printing to pay off the nation’s escalating fiscal debt, the country’s poor economic situation has cut it off from international financial markets.
State-funded programs in the nation cover almost all facets of the economy, including wages, utilities, education, and health care.
Argentina already spends an estimated 800 million pesos (more than $6 million) every day on public assistance programs.
At the same time, the country in South America had inflation that peaked in July at over 60% after reaching 58 percent in May. Relatively speaking, national inflation in 2015 was a little over 14%.
The spending practices of Argentina’s government are the cause of the growing issue, according to Harry Lorenzo, the chief financial officer of Income Based Research.
“The Argentine government has been grappling with a collapsing economy for some time now. The main reason for this is the government’s unsustainable spending, which has been funded in part by generous welfare programs,” Lorenzo explained.
Although the official spot price of the Peso has dropped to more than 130/USD…
The price of the ‘blue dollar’ on the grey market for US dollars is currently trading at about 300/USD.
Massa exclaimed to reporters in Buenos Aires, “Magic doesn’t exist. “We have to confront inflation with determination.”
The government will finance its budget by reducing its deficit or via private lending. The country is considering four loan offers by three international banks and a sovereign wealth fund, he said, without providing a figure of the potential deal.
Although light on specifics, Massa committed to meeting the government’s primary deficit target this year, a key pillar of its US$44 billion program with the International Monetary Fund. Massa said he spoke to IMF staff Wednesday to discuss the program’s future. An IMF spokesperson said in a statement that its staff spoke to Massa about implementing the program. -Buenos Aires Times
In the meantime, and possibly in connection with Massa’s swearing-in, cryptocurrency exchange Binance and Mastercard have teamed up to introduce a “cryptocurrency power card” for customers in Argentina. According to a news release, it will be used to buy daily products with digital cash.
The Latin American country will be the first to see this product available on its territory. At the time of writing, Binance claims the product is currently in beta; it will become “widely available” for all users in Argentina over the coming weeks.
The Binance Card is issued by Credencial Payment, the press release revealed. Every user in the country will be available for the product as long as they have completed the exchange Know Your Customer (KYC) process and presented a valid national ID. –Bitcoinist
Walter Pimenta, EVP of Mastercard Latin America,” Our work with digital currencies builds on our strong foundation to enable choice and peace of mind when people shop and pay. Together with our partners, Mastercard has been leading the payments industry in enabling entry to this exciting new world, helping bring millions of additional users into crypto and other digital assets in a safe and trusted manner.”