LA RIOJA, Argentina (AP) 鈥� They look like cash, fit into wallets like cash and the governor promises they鈥檒l be treated like cash.
But these brightly colored banknotes aren鈥檛 pesos, the depreciating of Argentina, or U.S. dollars, everyone鈥檚 money of choice here.
They are chachos, a new emergency tender invented by the of La Rioja, a province in the country's northwest that went broke when slashed federal budget transfers to provinces as part of an .
鈥淲ho would have imagined that one day I鈥檇 find myself wishing I鈥檇 gotten pesos?鈥� said Lucia Vera, a music teacher emerging from a gymnasium packed with state workers waiting to get their monthly bonus of chachos worth 50,000 pesos (about $40).
Across La Rioja's capital, 鈥淐hachos accepted here鈥� decals now appear on the windows of everything from chain supermarkets and gas stations to upscale restaurants and hair salons. The local government guarantees a 1-to-1 exchange rate with pesos, and accepts chachos for tax payments and utilities bills.
But there鈥檚 a catch. Chachos can鈥檛 be used outside La Rioja, and only registered businesses can swap chachos for pesos at a few government exchange points.
鈥淚 need real money,鈥� said Adriana Parcas, a 22-year-old street vendor who pays her suppliers in pesos, after turning down two customers in a row who asked if they could buy her perfumes with chachos.
The bills bear the face of 脕ngel Vicente 鈥淐hacho鈥� Pe帽aloza, the caudillo, or strongman, famed for defending La Rioja in a 19th-century battle against national authorities in Buenos Aires. A QR code on the banknote links to a website denouncing Milei for refusing to transfer La Rioja its fair share of federal funds.
, Milei swiftly in a bid to reverse decades of budget-busting populism that ran up Argentina's . The cuts squeezed all of Argentina鈥檚 23 provinces but boiled over into a full-blown crisis in La Rioja, where the public payroll accounts for two-thirds of registered workers and the federal government鈥檚 redistributed taxes cover some 90% of the provincial budget.
With just 384,600 people and little industry beyond walnuts and olives, La Rioja received more discretionary federal funds than any other last year except Buenos Aires, home to 17.6 million people. Yet the province鈥檚 tops 66% 鈥� the result, critics say, of a patronage system long used to placate interest groups at the expense of efficiency.
While Milei's reforms forced other provinces to tighten their belts and , Governor Ricardo Quintela 鈥� an ambitious power broker in Argentina鈥檚 and one of Milei鈥檚 fiercest critics 鈥� refused to absorb the strife of austerity.
鈥淚鈥檓 not going to take food from the people of La Rioja to pay the debt that the government owes us,鈥� Quintela told The Associated Press, portraying his chacho-printing plan as a daring stand against 10 months of crumbling wages, rising unemployment and deepening misery under Milei.
La Rioja defaulted on its debts in February and August. A New York federal judge ordered the province to pay American and British bondholders nearly $40 million in damages in September. Argentina鈥檚 Supreme Court is taking up the case of the province鈥檚 refusal to charge after Milei鈥檚 removal of subsidies.
鈥淭here鈥檚 an alternative path to the cruelty of policies that the president is applying,鈥� Quintela said.
He appeared confident, speaking as Milei鈥檚 approval ratings dipped below 50% for the first time since the radical economist came to power.
But as Milei and his allies tell it, Quintela鈥檚 alternative offers little more than a return to of reckless spending 鈥� 鈥� that delivered the unmitigated crisis that his government inherited.
鈥淵ou were used to having your tie fastened for you and your shoes polished, but now, you鈥檝e got to tie the knot yourself,鈥� Eduardo Serenellini, press secretary of Milei鈥檚 office, snapped at La Rioja business leaders on a recent visit to the province. 鈥淲hen you run out of cash, you run out cash.鈥�
Serenellini picked up a chacho note, then flicked it away like lint.
Gov. Quintela鈥檚 gambit in the remote province has had little effect on Argentina鈥檚 federal finances, but that could change if more cash-trapped provinces catch on, as happened during Argentina鈥檚 , when a similarly brutal austerity scheme sent over a dozen provinces scrambling to print their own parallel currencies.
Unlike two decades ago, when former President N茅stor Kirchner, a Peronist, put an end to the chaos by redeeming 鈥減atacones,鈥� 鈥渃ecacores鈥� and 鈥渂oncanfores鈥� for pesos, President Milei has ruled out a bailout for La Rioja.
鈥淲e will not be accomplices to irresponsible people,鈥� Milei warned in a recent interview with Argentine TV channel Todo Noticias. But the libertarian purist added that he couldn鈥檛 stop La Rioja from doing what it pleased, considering that Argentina's constitution allows for such desperate financial work-arounds.
The chacho hit the streets in August after La Rioja鈥檚 legislature approved plans to run off $22.5 billion pesos worth of the currency to help cover up to 30% of public sector salaries.
With La Rioja鈥檚 average income sinking below $200 per month and stores shuttering for lack of business, authorities doled out 8.4 billion pesos worth of the scrip in monthly bonuses in August and September, an effort to help workers cope with Argentina鈥檚 230% and
To encourage the chacho's use, authorities promise to pay interest of 17% on bills held to maturity on December 31.
鈥淭he closer we get to the expiration date, the more we鈥檒l see public confidence in the chacho increase,鈥� said provincial treasurer advisor Carlos Nardillo Giraud.
Most state workers interviewed in the many chacho lines spilling onto La Rioja鈥檚 sidewalks last month said they wanted to get rid of the bills as quickly as possible.
鈥淣ow the chacho is an alternative, an option for people who can鈥檛 make it to the end of the month,鈥� said 30-year-old physics teacher Daniela Parra, mounting her boyfriend鈥檚 motorcycle with arms full of chachos, ready to spend them all in one go at the supermarket. 鈥淲ho knows what will it be next month?鈥�
On the streets, merchants said they felt locked in a catch-22.
Rejecting chachos meant turning away customers with new spending power in . But accepting chachos meant filling cash registers with money that鈥檚 worthless to foreign suppliers and already changing hands at a discount to pesos on the street.
鈥淭hey've formed a system where you're forced to depend on the state for everything,鈥� said Juan Keulian, the director of La Rioja鈥檚 Center for Commerce and Industry. 鈥淭here鈥檚 no choice in a place like this."
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