La Rioja’s Innovative Response to Austerity: Introducing Chachos as Emergency Tender

La Rioja, a province in northwest Argentina, has turned to an unconventional solution in response to the drastic austerity measures implemented by far-right President Javier Milei. After entering office in December 2023, Milei swiftly enacted severe fiscal reforms, slashing federal budget transfers to provinces. In an effort to sustain its workforce and stimulate the local economy, La Rioja has introduced “chachos,” a new emergency tender intended to function like cash.

These brightly colored chachos are designed to alleviate the financial pressure on state workers who have seen their wages stagnate amid soaring inflation. Lucia Vera, a music teacher, reflected on the situation, stating, “Who would have imagined that one day I’d find myself wishing I’d gotten pesos?” as she collected her chacho bonuses worth 50,000 pesos (about $40).

The local government has guaranteed a 1-to-1 exchange rate between chachos and pesos, allowing them to be used for tax payments and utility bills. However, the currency has limitations: it is only accepted within La Rioja, and only registered businesses can exchange chachos for pesos at designated government points. Many residents, like street vendor Adriana Parcas, find the chachos impractical, stating, “I need real money.”

Governor Ricardo Quintela, a prominent figure in Argentina’s Peronist movement and a staunch critic of Milei, is positioning the chachos as a necessary alternative to the president’s austerity policies. “I’m not going to take food from the people of La Rioja to pay the debt that the government owes us,” Quintela asserted. The introduction of chachos comes as La Rioja faces a poverty rate exceeding 66%, with the public payroll comprising two-thirds of registered workers.

Despite the controversial nature of the chachos, their introduction represents a defiant stand against Milei’s sweeping budget cuts. Critics argue that the chachos may merely postpone deeper financial issues, echoing the chaos of Argentina’s previous economic crises.

The province has experienced severe financial strain, defaulting on its debts in February and August, with the federal government recently ordering La Rioja to pay nearly $40 million to foreign bondholders. Milei has ruled out a bailout for the province, insisting that his government will not support “irresponsible people.”

As the chachos circulated, La Rioja authorities aimed to bolster their usage by promising a 17% interest on bills held to maturity at the end of December. Provincial treasurer advisor Carlos Nardillo Giraud expressed optimism that confidence in the chacho would grow as the expiration date approached.

However, many state workers are eager to spend their chachos quickly. Daniela Parra, a physics teacher, remarked, “Now the chacho is an alternative, an option for people who can’t make it to the end of the month.” Merchants in La Rioja find themselves in a difficult position, caught between accepting chachos and needing pesos to pay suppliers.

Ultimately, while the chachos provide temporary relief, they highlight the ongoing struggles of La Rioja amid a national economic crisis characterized by soaring inflation and austerity measures.

Key Takeaways:

• La Rioja has introduced chachos to combat austerity cuts imposed by President Milei.
• The new currency aims to support state workers and stimulate the local economy amid high inflation.
• Governor Ricardo Quintela positions chachos as a necessary alternative to austerity, despite criticisms of potential long-term consequences.

In conclusion, La Rioja’s chacho experiment underscores the province’s resilience amid fiscal challenges, though its effectiveness remains to be seen in the broader context of Argentina’s economic landscape.