Defying Milei, opposition governor Quintela brings back his ‘chachos’ currency in La Rioja

One of Argentina’s most outspoken opposition governors is bringing back a local currency that can only be spent inside his province, doubling down on an interventionist economic model just as President Javier Milei tries to convince investors that the country has embraced free markets for good.

Governor Ricardo Quintela is handing out ‘chachos,’ as the notes are called, to roughly 80,000 public workers and other beneficiaries in La Rioja, a small, impoverished province set along the eastern edge of the Andes mountains. Workers will receive a bonus payment of 50,000 chachos a month – equal to about US$33, or nearly 10 percent of the local average wage – through the end of the year, reviving an initiative to prop up consumption that Quintela, a prominent Peronist party leader, first launched in 2024.

The return of the chacho, which circulates at a one-to-one exchange rate with the peso, exposes a stubborn reality lying just beneath Milei’s transformation of Argentina. He may have managed to slash bureaucracy, stabilise the inflation-ravaged economy and unleash a commodities export boom, but growth in the broader economy remains tepid and new jobs scarce, leaving many Argentines feeling left behind.

That leaves political space for the interventionist model, long promoted by the Peronist opposition, that he’s trying to eradicate.

Mired in default since 2024, La Rioja embodies that alternative approach in its starkest form. There are more than three public-sector workers for every formal private-sector employee, according to national government data, making the local government the main engine of growth. The province runs a sprawling network of state-controlled companies and has shunned Milei’s flagship investment incentives while neighbouring regions have drawn commitments for more than US$15 billion of mining investments. 

Quintela has described the chacho as an “act of rebellion” and threatened to reverse Milei’s reforms if the Peronists manage to defeat him in elections next year.

“Investors need to be warned: Peronism is going to review absolutely everything,” he said in a radio interview last month. “Whatever needs to be nationalised, we will nationalise. Whatever needs to be expropriated, we will expropriate. We’re going to take it back.” 

Milei seems unperturbed. “Peronism always proposes spending more,” the President wrote on X after the province announced the return of the chacho. “And it always proposes paying for these delusions by printing money.”

The provincial leader has pumped about four billion chachos into circulation, worth roughly US$3 million, over the last month. Legally, he could go much further: local lawmakers have authorised as much as 85 billion pesos (US$50 million) through December this year.

So far, he is alone in his efforts.

While other provinces have also historically issued notes, mainly during crises like the US-peso peg collapse of the early 2000s, La Rioja is the only one to do so in the last 20 years. But for investors pouring money into Argentina on the basis that Milei’s market-friendly shift will outlast his presidency, the revival of the local notes makes La Rioja more than just an eccentric holdout. 

“These aren’t unthinking outbursts,” said Lucas Romero, who runs Buenos Aires-based political consultancy Synopsis. “There is a clear intention to provoke with disruptive proposals that are antagonistic to Milei and stir market fears.”

Keeping that political risk alive, he said, works in Peronism’s favour, and could pressure Milei heading into the 2027 election. 

Barely 20 minutes after Juan Barrionuevo received his 50,000 chachos, they were gone.

The public-school saxophone teacher, who drives an Uber on the side to support his monthly salary of one million pesos (US$650), collected the colorful notes at a park. He then drove to a petrol station and spent the entire amount on about half a tank of fuel.

“At least I can put them to work,” he said. “People aren’t thinking about the economy at large – they’re thinking about their own pockets. Isn’t the peso just a piece of paper too?”

Barrionuevo is among thousands of Riojans being handed the notes at an unlikely assortment of places: public parks, sports centres, tax offices, and even branches of the state-controlled electricity distributor.

Outside one such branch one afternoon in late August, several dozen people stood for about an hour to collect their chachos. In a province where the average monthly income is less than US$400, few can afford to dismiss extra money. 

Some merchants, like Gustavo Pairetti, won’t take chachos as payment at his empanada shop in La Rioja city since the suppliers he buys meat, cheese and cold cuts from don’t accept them. But the notes don’t tend to stay in workers’ wallets for very long.

It’s a pass-the-chacho economy: workers use the notes to buy goods, while merchants use them for provincial obligations, like taxes, or hold them until designated redemption windows open. 

“People get rid of them right away, buying what they couldn’t afford before,” said Juan Keulian, president of La Rioja’s Centre for Commerce and Industry. “The chachos help revive retail sales a little – just a little – because business is deeply depressed.” 

“It is also a message,” added Ricardo Herrera, La Rioja’s secretary-general. “It is the path we have chosen to counter Milei’s model of an absent state.”

Since taking office, Milei has moved swiftly to shrink the state, slashing spending enough to deliver Argentina’s first annual budget surplus in 15 years. Cuts to discretionary transfers and public works in the provinces were a key part of the adjustment, and while the overhaul helped stabilise the economy and won plaudits from investors, it hit particularly hard in places like La Rioja, where federal funding and public-sector wages underpin much of local demand.

“La Rioja isn’t poor. It has been impoverished from the 1980s to the present,” said Gabriela Rodríguez, a local lawmaker who opposes Governor Quintela, pointing to what she described as the province’s undeveloped economic potential following roughly four decades of Peronism rule.

The chacho is also deeply symbolic – named for La Rioja’s iconic caudillo, Angel Vicente ‘Chacho’ Peñaloza, who defended the province against forces aligned with the central government in Buenos Aires. In a 21st-century twist, each banknote carries a QR code linking to a website attacking Milei’s government for withholding federal funds that La Rioja says it is owed.

La Rioja has the lowest average individual and per-capita household incomes in all of Argentina, according to the INDEC national statistics bureau. As of June, nearly a quarter of household debt was delinquent – the highest in the country, according to a report by consulting firm EcoGo and Buenos Aires-based Austral University.

“If there’s a decline in economic activity among public employees, we all get to feel it,” said Leonardo Guzmán, who has run a furniture business in La Rioja for more than four decades. “The chachos are undoubtedly the result of bad economic management. We’re talking about a province that can’t pay with real money.”

He accepts them anyway. 

“I’m part of this province and sometimes you have to play by the rules,” Guzmán said. “Someone was paid in chachos. What fault is it of theirs?”