Argentina devalues peso, seeks to solve fiscal deficit 'addiction'

The news: Argentina will devalue its currency, cut energy subsidies and axe public works as it scrambles to solve its worst economic crisis in decades.

The numbers: The country will devalue its peso by more than 50% to 800 per US dollar (1224 per Australian dollar) and cut spending to temper fiscal deficits and try to control inflation, which has already reached as high as 143%. Argentina is running a fiscal deficit of roughly 5.5% of GDP and has ran budgets in the red for 113 of the last 123 years, new Economy Minister Luis Caputo said in a speech reported by Reuters.

The context: Argentina, South America's second-largest economy after Brazil, is a major agricultural exporter and also has interests in mining and manufacturing. According to Reuters, around two-fifths of Argentina's population lives in poverty, and the nation has a USD44 billion loan with the International Monetary Fund.

What they said: "The objective is simply to avoid catastrophe and get the economy back on track," Caputo said. "We're here to solve this problem at the root... For this we need to solve our addiction to a fiscal deficit."