Argentina Announces 35% Minimum Wage Boost After Peso Rout

(Bloomberg) --

Argentina will boost the minimum wage by 35% over the next three months after a sharp fall in the peso undermined citizens’ purchasing power on the eve of general elections.

The government is raising wages in three installments, according to a decree published in the official gazette on Tuesday. Wages will rise from the current ARS12,500 ($215) to a final amount of ARS16,875 per month after the three payments.

The move comes after the peso dropped over 20% as opposition candidate Alberto Fernandez trounced President Mauricio Macri in an Aug. 11 primary election that indicates he’s likely win the top job in October. Following the peso collapse, cabinet members announced a series of measures aimed at softening the blow to Argentines, including tax breaks, bonuses and price freezes. The currency collapse is likely to further fuel inflation, which is already running at over 50% a year.

On Sunday the government announced capital controls in an effort to contain the country’s escalating financial crisis. Argentina’s Eurobonds fell, while the peso strengthened in the wake of the announcement.

The International Monetary Fund, which is currently analyzing whether to pay out the next tranche of its $56 billion loan to the country, said that it is studying the details of the measures.

To contact the reporter on this story: Carolina Millan in Buenos Aires at cmillanronch@bloomberg.net

To contact the editors responsible for this story: Juan Pablo Spinetto at jspinetto@bloomberg.net, Bruce Douglas

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