Argentina on Tuesday announced a sharp devaluation of its currency and cuts to energy and transportation subsidies as part of shock adjustments new President Javier Milei says are needed to deal with an economic “emergency.”

Economy Minister Luis Caputo said in a televised message that the Argentine peso will be devalued by 50% from 400 pesos to the U.S. dollar, to 800 pesos to the dollar.

“For few months, we’re going to be worse than before,” he said. 

It comes two days after the libertarian Milei was sworn in as president of the second largest economy in South America, and immediately warned of tough measures.

Milei said the country didn’t have time to consider other alternatives.

Argentina is suffering 143% annual inflation, its currency has plunged, and four in 10 Argentines are impoverished. The nation has also a yawning fiscal deficit, a trade deficit of $43 billion, plus a daunting $45 billion debt to the International Monetary Fund, with $10.6 billion due to the multilateral and private creditors by April.

As part of the new measures, Caputo said the government is also canceling tenders of any public works projects and cutting some state jobs to reduce the size of the government. He also announced cuts to energy and transportation subsidies without providing details or saying by how much.

He said the measures are necessary to cut the fiscal deficit he says is the cause of the country economic problems, including surging inflation.

“If we continue as we are, we are inevitably heading towards hyperinflation,” Caputo said. “Our mission is to avoid a catastrophe.”

The IMF welcomed the measures, saying they provide “a good foundation” for further discussions with Argentina about its debt with the institution.

“These bold initial actions aim to significantly improve public finances in a manner that protects the most vulnerable in society and strengthen the foreign exchange regime,” said IMF spokesperson Julie Kozack in a statement. “Their decisive implementation will help stabilize the economy and set the basis for more sustainable and private-sector led growth.”