New Argentine Currency Launched to Offset Milei’s Shock Therapy

(Bloomberg) -- There are few places in all of Argentina as poor as La Rioja, a sleepy, desolate province carved out of the red-clay highlands that form the country’s northwestern border with Chile.

And it is here, in La Rioja, that the financial toll of President Javier Milei’s shock economic therapy — a high-stakes bid to tame chronic inflation — can best be observed. When Milei slashed the monthly cash transfers from the federal government to the provinces, La Rioja went broke. In February, it fell into default. And soon the local economy had sunk into a deep recession.

So the governor, an outspoken critic of Milei by the name of Ricardo Quintela, dialed up a radical plan of his own. He created the province’s own currency, the chacho, had sheets of it printed up and started doling it out in wads of 50,000 to all government employees. It was a little bonus payment, Quintela said, to help people buy more of the essentials they’d been skimping on. Shop owners weren’t outright forced, but rather strongly encouraged, to accept chachos just like they would pesos. One chacho equals one peso.

On a chilly morning in late August, the province’s workers bundled up in heavy jackets and hurried to get into line to collect their new currency. There was some grumbling as morning turned to afternoon and the line crawled along at a glacial pace — “seven hours to collect 50,000 filthy chachos,” one groused — but the mood was generally light. They made small talk and sipped mate. The payment they were due, equal to some $40, was a lot of money in a province where the average monthly salary is just $240.

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