Related topics

Government boosts prices in new economic measures

July 21, 1987

BUENOS AIRES, Argentina (AP) _ The government on Monday announced tough new economic measures, including price increases and the disposal of eight state companies, to repair what it called ″decades of economic damage.″

Economy Minister Juan Sourrouille in a nationally televised speech said the measures, effective at midnight Monday, were taken because ″we are living in a time of transition ... of economic crisis.″

These were among the actions decreed:

-Price hikes of 11 percent for all public transportation.

-An increase in gasoline prices of 10 percent in most of the country and 12 percent in the southern region of Patagonia.

-Eight oil-related state businesses will be turned over to the private sector. They are Forja Argentina, Polisur, Petropol, Induclor, Monomeros Vinilicos, Atanor Sam, Petroquimica Rio Tercera and Carboquimica Argentina.

-All foreign exchange houses were closed by the Central Bank. Only travel agencies will be allowed to exchange foreign money for the Argentine currency, the austral.

-The debt-heavy state oil monopoly, Yacimientos Petroliferos Fiscales, will be broken into four divisions: Exploration and exploitation, industrializat ion, commercialization and transport.

Argentina has had a surge in inflation that registered 108 percent in the past 12 months.

Closure of the exchange houses was a move to reduce the black-market trading of the U.S. dollar for the austral, which has dropped 50 percent in value since January.

The austral was pegged officially Monday at 1.90 to the dollar and 2.38 to the dollar on the parallel market that is used in some import-export transactions.

Low world prices for grain, a major export item for Argentina, and subsidies by major grain suppliers such as the United States and the European Economic Comunity, are blamed for some of the nation’s economic problems.

Economists also say the state bureaucracy is inefficient and overstaffed.

The government said it was proceeding with the increased privatization of state-owned businesses ″to put behind us this semi-autocratic scheme that in the last few decades has not permitted us to take part in the world’s technological changes.″

Recent government reports said industrial production has not grown since mid-1986 and Argentina’s balance of payments deficit has increased in the last few months from $2 billion to $3 billion.

Argentina has a foreign debt of $52 billion.

About $32 billion of that debt has been restructured at more favorable rates since April by a steering committee of 350 creditor banks.

The economic measures were taken six weeks before the Sept. 6 elections for half the seats in the lower house of Congress, the House of Deputies, and for all 22 provincial governors.

Those elections are expected to give an indication of how President Raul Alfonsin’s Radical Civic Union will fare in the 1989 presidential elections against the major opposition, the Peronist Party. Alfonsin by law cannot run for re-election.

Update hourly