Argentina workers angry at austerity bill

greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

Argentina workers angry at austerity bill

Unions and opposition groups in Argentina say they are planning further protests against austerity measures that will see the Argentinean people's income slashed.

All salaries and pensions above $500 a month will be cut by 13% in a tough monetary package designed to resolve the country's severe economic crisis.

The cuts are unnecessary, unsustainable and any benefit will only by temporary ... I think we're in for a long recession Buenos Aires street vendor

-------------------------------------------------------------------------------- The measures were approved by the Senate on Monday, despite protests from workers who have mounted protests on the streets of Buenos Aires and have led a series of strikes, hitting the civil service, hospitals and transport. The final decision came after nine hours of intense debate by senators seeking to introduce the plans before the start of the working week.

The measures - put forward by President Fernando de la Rua - also include some new taxes and measures to stop tax evasion.

Market relief

But while the news was unpopular with state workers and pensioners, shares on the Buenos Aires stock market rose sharply in early trading, and the value of Argentine Government bonds rose on international markets.

Other countries have also welcomed the measures, including Brazil which has seen its currency lose value by more than 25% because of Argentina's problems.

The Argentinean president hopes the measures will help to balance the budget, stimulate economic growth, calm the fears of international investors and avoid default on the country's $128bn (£90bn) debt.

Argentina's economic troubles deepened two weeks ago when fears over the country's long term solvency, exacerbated by a three-year recession, caused stocks to plummet.

With unemployment at almost 18%, Argentina is facing what some analysts have described as the worst social crisis in the country's history.

Investors' fears

Investors had been nervously awaiting the bill's passage, which analysts say represents the country's best way of escaping its economic woes.

However, Senator Hector Maya of the opposition Peronist Party said the cuts would have an adverse effect on an already depressed economy.

"Lowering pensions and salaries won't do anything but deepen the recession and generate more unemployment," he told the Senate.

And some market observers are still worried that a zero-deficit policy will not in itself be enough to reactivate Argentina's economy and the government may actually need a surplus to keep ahead of interest payments on its mammoth debt.

They fear Argentina may have simply delayed the crisis rather than solved the problem definitively.

Public dismay

"We are lost" said Manuel Lopez as he tended his toasted peanut stall in downtown Buenos Aires.

"The (pension and salary) cuts are unnecessary, unsustainable and any benefit will only by temporary ... I think we're in for a long recession," he said.

Many Argentines have found it hard to accept the country's seventh austerity plan since 1999.

Many people blame the crisis in part on massive government corruption during the presidency of Carlos Menem.

Mr Menem is currently under house arrest accused of illegal arms sales to Croatia and Ecuador

http://news.bbc.co.uk/low/english/world/americas/newsid_1464000/1464100.stm

-- Martin Thompson (mthom1927@aol.com), July 30, 2001

Answers

Argentine savings plan hits another legal obstacle Friday August 3, 6:16 PM EDT

BUENOS AIRES, Argentina, Aug 3 (Reuters) - Argentina's new savings plan, aimed at calming fears of a default, hit a legal obstacle on Friday when a labor court ruled it unconstitutional and suspended its application to state workers of four unions.

It was the third legal setback for the "zero deficit" law, which bans deficit spending and new debt issues to calm fears about the country's ability to make payments on its $128 billion public debt. Two earlier unfavorable court rulings were annulled when Congress made it law.

A labor court ruled in favor of a suit brought by the large Argentine Workers' Center (CTA), which groups four unions with a high proportion of membership from the state sector.

The ruling suspends the application of the 13 percent wage cuts to the workers in these unions until it makes a definitive ruling on the legality of the balanced budget law, which was approved by Congress early on Monday.

http://money.iwon.com/jsp/nw/nwdt_rt.jsp? cat=USMARKET&src=201&feed=reu§ion=news&news_id=reu- n03295543&date=20010803&alias=/alias/money/cm/nw

-- Martin Thompson (mthom1927@aol.com), August 03, 2001.


Argentine State Workers Strike to Decry Austerity Photos

Reuters Photo By Simon Gardner

BUENOS AIRES, Argentina (Reuters) - Argentine state workers staged a strike on Wednesday, taking to the streets to decry an unpopular austerity drive that slashes salaries as the government implements massive spending cuts.

The strike came amid news of official efforts to seek additional cash from the International Monetary Fund (news - web sites) in an effort to head off a debt default.

Argentina's largest state worker labor group, the Argentine workers' confederation (CTA), vowed its strike would paralyze the public sector, bringing schools, hospitals and state-run offices of Latin America's No. 3 economy to a grinding halt.

While television broadcasts showed footage of marches and labor groups said hospital services were running at skeleton staff levels, the government had no immediate comment and the impact of the strike nationwide was unclear.

Meanwhile, groups of unemployed continued a second wave of roadblock protests from Argentina's northern border with Bolivia to Patagonia as thousands of unemployed decried the public spending cuts that also hit some pensioners.

``We are all in the same situation,'' said Marta Maffei, head of the Argentine Confederation of Education Workers (CTERA), which is grouped within the CTA. ``The people are all affected by these cutbacks and by exclusion, misery and poverty. Nobody escapes.''

Civil servants, jobless and university professors marched to the presidential palace in downtown Buenos Aires to voice outrage at the cutbacks in this land with unemployment estimated at 16.4 percent and a third of the population living in poverty.

The cash-strapped government's drive to end deficit spending and slash state salaries and some pensions by up to 13 percent has drawn fierce criticism from Argentine unions who say the poor will suffer the most under the austerity measures.

Argentine markets, which have punished local stocks and bonds in recent weeks amid default fears, are now looking for proof the government will stick to the austerity measures and not buckle in the face of mounting social protest with legislative elections looming in October.

International investors still remain skeptical of Argentina's prospects of clambering out of crisis.

Emerging debt market players see a 45 percent chance of a debt default or forced debt restructuring by the end of the year, according to a Reuters poll of 30 emerging market debt strategists, fund managers and economists based in the U.S. and Argentina. The respondents also saw a 44 percent chance of default in the first half of 2002, a 38 percent chance in the second half of next year and a 35 percent chance the local peso would be devalued.

Photos

Reuters Photo According to official data in Argentina, however, debt swaps, disbursements from a $40 billion IMF-led aid package sealed in December and other new initiatives will ensure the government can cover its debt payments for the rest of the year.

NEW AID IN WORKS?

Investors are watching for signs of additional financial help to ensure Argentina can continue servicing its $128 billion public debt, fend off any attacks by speculators and try to restore public confidence to stop Argentines from withdrawing their savings.

The IMF has said it will recommend speeding up an agreed $1.2 billion loan disbursement for Argentina, but markets are hoping the government will secure a multibillion dollar financial cushion.

Local media cited Argentine Treasury Secretary Jorge Baldrich as saying that the government was negotiating between $6 billion and $9 billion in aid with the IMF.

A high-ranking official within the Economy Ministry confirmed that Secretary Baldrich had made the statement.

But Economy Minister Domingo Cavallo has been more tight-lipped on the possibility of new IMF funds.

``(The IMF) has heard us argue that we deserve more help and need more help to fully reestablish confidence, not to finance any provincial or national deficit,'' Cavallo said late Tuesday, unveiling plans to enable Argentines to pay tax dues by buying bonds.

Argentine bonds were firmer on Wednesday, bouncing after recent losses amid market optimism for new aid amid Cavallo's comments, with the benchmark 2008 global bond up nearly 6 percent in early afternoon trade.

Argentina's leading MerVal share index was nearly 4 percent firmer in afternoon trading.

The closely-watched country risk premium the government must pay to entice investors away from safe-haven U.S. Treasuries narrowed 97 basis points to 1,487 basis points -- but that still makes Argentina a riskier bet than fellow emerging markets Brazil, Russia and Ecuador.

International reserves and bank deposits have fallen in recent weeks amid fears of a debt default after a three-year slump. Bank deposits fell 7 percent in July while total international reserves have fallen around 43 percent from the highs of $35.609 billion registered on July 19 last year.

(Additional reporting by Genevieve Wilkinson in New York)

http://dailynews.yahoo.com/h/nm/20010808/wl/economy_argentina_strike_d c_2.html

-- Martin Thompson (mthom1927@aol.com), August 09, 2001.


Moderation questions? read the FAQ