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Argentina Offers Bonds to Savers

March 5, 2002

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BUENOS AIRES, Argentina (AP) _ Argentines with savings frozen under a widely despised banking freeze will be able to swap a portion of their accounts for government bonds, Argentina’s economy minister said Monday.

The announcement by Jorge Remes Lenicov offers Argentine savers a chance to exchange as much as $30,000 for government-issued securities that will mature in either five years or 10 years.

Argentina’s government, which supsended debt payments and devalued its currency in January, will give Argentines until the end of the month to accept a possible swap of their accounts for the new bonds.

The government severely limited cash withdrawals on Argentine savings after a run on the banks last November. With the financial system on the verge of collapse, the freeze has remained in place, limiting the amount of money that can be withdrawn from bank accounts.

The devaluation of the peso has forced many Argentines who once held dollar savings accounts to take losses as the government forcibly converted all accounts to pesos at the new devalued rate.

For more than a decade, the peso was pegged one-to-one to the dollar, but today it trades at nearly 2-to-1.

Meanwhile, signs of country’s deep economic crisis persisted Monday as heart surgeons in Argentina’s cash-strapped public hospitals refused to conduct routine surgery in protest over a lack of medical supplies.

Dairy farmers demanding higher prices for their milk marched in the countryside, while protests against a bank freeze returned in the capital.

The scattered protests were peaceful but highlighted the still-simmering discontent over Argentina’s four-year-old economic downturn, this country’s worst fiscal crisis in decades. The country defaulted in December on $141 billion in public debt.

The country’s tailspin has left more than 22 percent of the workforce unemployed.

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