Argentina devalues peso, unveils measures to avoid 'hyperinflation'

BUENOS AIRES - Argentina devalued its currency by more than 50 percent in a set of "shock" measures aimed at reviving a crumbling economy and tackling triple-digit inflation.

The government of President Javier Milei, a libertarian who swept from obscurity to the top office vowing to chainsaw spending, also announced cuts to generous state subsidies and a halt to all new public construction projects.

In a pre-recorded video message, Economy Minister Luis Caputo took pains to explain to Argentines the causes of their decades of recurrent economic crises, debt, inflation and fiscal deficits.

Annual inflation is currently at 140 percent and poverty levels at 40 percent in Latin America's third-biggest economy.

The government coffers are also empty, and Milei has repeatedly said: "There is no money."

Caputo said the country had an "addiction" to spending to more than it earns, and had posted a fiscal deficit for 113 of the past 123 years.

"If we continue as we are, we are inevitably heading towards hyperinflation," said Caputo, adding that for the first time the government would tackle the problem "at its roots."

This is "precisely so that we do not have to suffer these consequences anymore, so that we do not have to suffer more inflation, so that we do not have to suffer more poverty," said Caputo.

The International Monetary Fund (IMF) -- to which Argentina owes $44 billion -- welcomed the measures.

"These bold initial actions aim to significantly improve public finances in a manner that protects the most vulnerable in society and strengthen the foreign exchange regime," the IMF said in a statement.