(Bloomberg) — When President Javier Milei defended the adoption of the dollar through a “free competition of currencies” in Argentina, few foresaw a brand new legal tender coming out of the middle of the country.
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The legislature of La Rioja, a small landlocked province known for its olives, approved the creation of a new quasi-currency this week, defying Milei’s austerity push to end the nation’s chronic fiscal deficit. La Rioja’s move evokes similar provincial currencies issued during past economic crises that ended infamously.
La Rioja Governor Ricardo Quintela — from the opposition Peronist coalition — requested authorization to launch the so-called bocade to pay part of public servants’ salaries after a strike by La Rioja’s local police force and protests from health workers. The legislature approved issuing as much as 22.5 billion pesos ($27.5 million) worth of bocades to complement workers’ paychecks in the national currency.
It’s not immediately clear if La Rioja will print physical bocade banknotes. In a statement, the legislature said Quintela is authorized to issue hard cash or register the money digitally in workers’ bank accounts. Whether businesses will accept bocades as a form of payment is also to be seen.
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Quintela blamed Milei’s austerity for forcing the province to freeze public workers’ salaries that can’t keep up with 211% inflation. He’s also suing the federal government for 9.3 billion pesos he says the province is owed from the 2023 budget.
Bocades and Patacones
Quintela argues that the bocade will allow the provincial government “to improve public administration workers’ salaries and revive the local economy,” according to a comment he posted on social media. To his point, government workers are crucial to La Rioja’s economy, outnumbering private sector workers in the province of 385,000 residents.
It’s not La Rioja’s first dance with a new currency. Like many Argentine provinces, it also created its own legal tender under the same name in the wake of the country’s 2001 debt crisis. Buenos Aires province, the country’s most populous, also printed the so-called patacones that were used as a form of payment until they were converted into pesos by the national government.
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Milei, who has put plans to replace the peso with the dollar on hold to prioritize budget austerity, sarcastically welcomed La Rioja’s decision.
“Provincial currencies are welcome to compete,” Milei wrote on social media. But, “unlike what happened in the past, in no way are they going to be rescued by the national government.”
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