Argentine Massa orders immediate spending limits at first

BUENOS AIRES, Aug 4 (Reuters) – The leader of Argentina’s new economy has taken a first step towards imposing new restrictions on government spending, spending that has fueled one of the highest inflation rates in Latin America in a country long plagued by financial turmoil.

Economy Minister Sergio Massa asked finance officials in a memo to suspend all temporary transfers, also known as direct loans, from the Treasury to pay government spending starting Thursday, according to this official document seen by Reuters.

The instructions in the note dated Thursday confirm the austerity measure outlined by Massa in a speech he gave on Wednesday, his first day as minister, in which he sought to reaffirm the government’s determination to fight against excessive spending. Read more

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“From now on and until further instructions are provided, we request that (finance officials) refrain from requesting temporary transfers from the national treasury for funding,” according to the memo signed by Massa.

Annualized inflation in Argentina currently exceeds 60%, according to government data, and some analysts expect it to exceed 70% by the end of the year.

The new economy minister pledged on Wednesday to prioritize cost-cutting measures in a bid to reduce a growing budget deficit, as the country faces an economic crisis that President Alberto Fernandez has until now had trouble taming.

Some local markets nevertheless seemed encouraged by the latest developments.

Argentinian stocks and bonds, as well as the peso, rose slightly on Thursday, led by the Merval stock index, which rose 1.1% during the session before closing essentially flat.

Meanwhile, the parallel black market peso gained 1.7% to trade at 293 per US dollar, while over-the-counter sovereign bonds rose 0.8%.

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Reporting by Jorgelina do Rosario and Maximilian Heath; Editing by David Alire Garcia, Christian Plumb and Marla Dickerson

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