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Argentina Unveils New Spending Plan

February 9, 2002

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BUENOS AIRES, Argentina (AP) _ President Eduardo Duhalde unveiled a sweeping plan on Friday to scale back political spending as hundreds of angry Argentines kept up demonstrations calling on banks to return their partially frozen deposits.

Duhalde is moving to reduce the size of Argentina’s government, making deep spending cuts demanded by the International Monetary Fund in exchange for badly needed aid.

On Wednesday, Duhalde reached an accord with provincial governors to make cuts of some $500 million by scaling back the size of national, provincial, and municipal governments.

The plan calls for a 25 percent reduction in the number of seats in those bodies along with a similar cut in the number of staff. To further trim government expenditures, Duhalde is proposing to eliminate midterm congressional elections.

``The plan’s savings will used for social programs,″ Duhalde said in a nationally televised address announcing the program late Friday.

As Duhalde worked to finalize the plan, labor and neighborhood organization leaders posted messages on the Internet and forwarded e-mails summoning Argentines to participate in a nighttime pot-banging protest against Duhalde’s handling of the economy.

By nightfall, small and scattered protests flared up around Buenos Aires.

During the day, some 300 demonstrators staged a noisy, traffic-snarling march through downtown Buenos Aires to demand the end of banking restrictions.

``Thieves, we want our money back!″ they chanted as they used pots and pans to bang on the metal shutters of banks, damaging the steel shutters on one Citibank branch and shattering a plate glass window at nearby Scotiabank Quilmes.

Police looked on but did not intervene in the demonstration, which concluded outside the nation’s Central Bank.

It was the latest in nearly daily protests in this capital and cities nationwide, and demonstrators vowed to keep up the pressure until a two-month-old banking freeze is dropped.

``We feel ripped off. We feel defrauded. The banks have taken our dollars and we want them back,″ said Sandra Giovanni, one of the demonstrators.

The government of former president Fernando de la Rua imposed the banking freeze Dec. 1 to stymie a run on banks that saw $2 billion yanked from the teetering financial system in a single day. Many deposits remain stuck in the system, some until 2003.

In other developments, deputy economy minister Jorge Todesca pledged the peso would be fully and freely floated on Monday. The unfettered currency float is to come after a weeklong banking holiday that barred most currency trading and financial transactions.

The Argentine currency on Monday will be fully uncoupled from the dollar for the first time after the peso was pegged at 1-to-1 with the dollar for 11 years, until a January devaluation.

The peso now trades about 2-to-1 to the dollar on the open market, but Todesca said on Monday an ``official rate″ of 1.4 pesos per dollar for limited business transactions would be scrapped.

``The first week of operations won’t be typical,″ Todesca said of the free-floating peso, warning the country to expect some volatility.

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