Argentina's president announces new austerity measures

Argentina's president Mauricio Macri on Monday announced he was slashing his government's bureaucracy in half and restoring taxes on grain exporters as part of sweeping new austerity measures to stabilize the economy.

The center-right president admitted in a speech to the nation that Argentina was facing "an emergency," after its currency, the peso, lost more than half its dollar value this year.

"We must confront a fundamental problem: to not spend more than we have, to make efforts to balance the state's accounts," he said in the televised address.

He pledged a pared-down government following cuts that would see the number of ministries slashed from 22 to 10 in an effort to save money, demoting more than half his ministers.

The move had little immediate effect on the markets, slipping back near the record lows of last week, closing 2.7 percent lower at 39.04 to the dollar.

Thousands of laid-off government workers took to the streets of Buenos Aires to protest the government's austerity program.

Argentina is one of the world's biggest exporters of corn and soy oil. Macri's market-friendly approach had previously seen him cut taxes on major grain exporters.

Addressing rich agricultural exporters who will now face increased export taxes, he said: "We know it's a bad tax, but I ask you to understand that it's an emergency." "We ask those who have more capacity to contribute, those who export, that they make a greater contribution," he said.

In a bid to reassure worried Argentines, he said he would allocate more aid to the country's poor as 25 percent inflation has left many struggling.

"We will overcome the crisis by taking care of the most needy," he said, promising "increased allocations, food programs and price caps on some commodities." Economy Minister Nicolas Dujovne said many of Argentina's problems stemmed from a difficult international climate, but he recognized in a press conference later that "mistakes had been made."
ING Economics said that if the moves fail to stabilize the currency, Macri "will need to contemplate more drastic options, such as currency controls."