In the economically struggling province of La Rioja, Argentina, the harsh impact of President Javier Milei’s austerity measures is acutely felt. La Rioja, one of the country’s poorest provinces, is at the center of a financial storm after the federal government slashed its monthly cash transfers, leaving the province in a deep recession and eventually in default.
In response to this crisis, Governor Ricardo Quintela, a vocal critic of Milei, launched a bold initiative to stabilize the local economy: the introduction of a new provincial currency, the “chacho.” Named after a local 19th-century hero, the chacho is intended to be used as a supplementary currency alongside the Argentine peso. Quintela’s administration has already distributed roughly $3 million worth of chachos to government employees as a “bonus payment” to help cover basic necessities.
The introduction of the chacho has led to mixed reactions among the province’s residents and businesses. While some see it as a necessary lifeline in an economy where the average monthly salary is just $240, others are skeptical. Local merchants have been urged to accept the chacho, but many remain cautious, setting strict conditions for its use and opting to convert the currency back to pesos at government offices whenever possible.
Critics, including local business leaders, have drawn comparisons to Venezuela, pointing out that the chacho is more of a temporary fix than a sustainable solution. Despite its limitations, the currency has quickly circulated, with some residents fearing a repeat of past local-currency experiments that ended in devaluation and loss.
This move by Quintela may be seen as a reflection of the broader economic challenges Argentina faces under Milei’s administration. As Bloomberg highlights, while the chacho may offer short-term relief, it underscores the deeper, systemic issues plaguing La Rioja and potentially other provinces that might consider similar measures in the future.
