Thursday, April 04, 2002

Argentina battles spread of poverty

Argentina's president, Eduardo Duhalde, has announced fresh measures to relieve poverty.

Under the new plan, each unemployed household will from 15 May receive 150 pesos ($50.5) a month.

Argentina in crisis
Currency devalued
In default on $141bn debt
One-in-five unemployed
About 45% of the population live in poverty

An economic crisis has rocked Argentina, leaving almost half of the population below the poverty line.

And an estimated one-in-five of the country's 36 million people are unemployed.

The plan, which will be financed through taxes on exports and cuts in special pensions, is seen as a way of settling the social unrest that ousted Mr Duhalde's predecessor.

Inflation woes

Mr Duhalde said the financial help would go to homes "where many times not even the basic human rights to life, health, food, clothing, education and housing are guaranteed".

Argentina is stuck in a four-year recession that culminated in the default on its $141bn of debt and a currency devaluation.

The peso has already lost about 70% of its value, prompting increases in the prices of fuel, drugs and groceries.

The rises have sparked almost daily protests in the streets, although not of the same scale as last December when more than 20 people were killed.

That violence brought about the resignation of the then president, Fernando de la Rua.

Conflicting demands

Earlier this week, a delegation from the International Monetary Fund (IMF) arrived in Argentina to decide whether to grant the country fresh aid.

Extra money is viewed as essential if Argentina is quickly to pull itself out of its financial crisis, and revive its virtually bankrupt banking sector.

IMF wish list
Lifting of banking restrictions
More budgetary restraint
Changes to bankruptcy laws
Workable exchange rate
Sustainable fiscal and monetary policy

A green light from the IMF would also open the door to renewed lending from the wider international financial community.

Mr Duhalde is hoping to persuade the IMF to part with at least $10bn.

But the IMF has already made it clear that Argentina will have to make tough political decisions and enact economic reforms before money is released.

And the government is mindful of the need to retain the favour of downtrodden Argentines.

The IMF's view on Mr Duhalde's social plan - and the methods of financing it - are not yet known.