La province of La Rioja in Argentina has introduced a new emergency tender called chachos by the left-wing populist governor as a response to budget cuts from the federal government. These brightly colored banknotes are being distributed to state workers and are intended to be treated like cash. The chachos have a 1-to-1 exchange rate with pesos within La Rioja, but they cannot be used outside the province. The introduction of chachos has caused mixed reactions among the locals, with some accepting them as a necessary alternative currency while others are hesitant due to their limited usability.
The chachos bear the face of strongman Ángel Vicente “Chacho” Peñaloza, who defended La Rioja in a historic battle against national authorities. The bills also include a QR code linking to a website criticizing President Javier Milei for withholding federal funds from La Rioja. Milei’s austerity measures have had a significant impact on La Rioja’s economy, leading to rising unemployment and deepening misery. Governor Ricardo Quintela, a critic of Milei, views the chacho as a way to circumvent the financial difficulties faced by the province and its residents.
La Rioja defaulted on its debts and has faced legal challenges from bondholders as a result of its financial crisis. Despite the challenges, Quintela remains committed to using the chacho as a means of payment for state workers and as a tool to revive the local economy. However, critics, including Milei’s supporters, argue that the use of chachos is a short-term solution that does not address the underlying issues of financial mismanagement and reliance on unsustainable financial practices. They warn that the use of parallel currencies could trigger similar actions in other cash-strapped provinces.
The introduction of the chacho has created a dilemma for businesses in La Rioja, with some reluctant to accept the currency due to its limited exchangeability and potential loss in value. State workers, on the other hand, are eager to spend the chachos quickly to ensure they retain their value. As the province grapples with economic uncertainty and inflation rates exceeding 230%, the future of the chacho remains uncertain. While La Rioja’s government is hopeful that the currency will gain public confidence and help boost the local economy, challenges remain in ensuring its sustainability and long-term viability in the face of ongoing financial difficulties.
