- BUENOS AIRES/WASHINGTON
- On its second day of talks with multilateral lenders in Washington,
Argentina on Wednesday tentatively estimated it needs $22 billion to $23
billion in aid to get back on its feet but the IMF said it was
to talk numbers.
- "Normally these crises require about 12 percent
of economic output, which in our case is 22 to 23 billion dollars, and
in some cases they have required more," said Argentine Deputy Economy
Minister Jorge Todesca in Buenos Aires. "That doesn't mean we're
these numbers with the agencies," he told a local radio
- But while Todesca said that no "specific
was yet on the table in negotiations with the International Monetary Fund
that he predicted could drag on for four to six weeks, his tentative
jived with those of other Argentine officials.
- In Washington, IMF External Relations Director Tom Dawson
said it was "premature to be talking about numbers. There are no
on the table."
- He called the contacts so far "quite positive,"
but said real negotiations do not typically begin until an IMF mission
visits a country. In Argentina's case, no date has been fixed for such
a visit, Dawson said.
- Argentine Economy Minister Jorge Remes Lenicov's meetings
with the IMF, U.S. Treasury, World Bank and InterAmerican Development
Bank are off to a good start, officials say.
- That news combined with the successful flotation of the
peso earlier this week provided Argentines a breather from relentlessly
bleak news of recession and misery.
- Since December when deadly riots forced out two
in succession, shaking one of Latin America's firmest democracies to its
core, Argentina has defaulted on part of its $141 billion public debt and
devalued its peso currency after being fixed at par to the dollar for over
- Officials say President Eduardo Duhalde is leery of
a "shopping list" of funding needs, especially since his country
swallowed up billions of dollars in assistance last year and still could
not avert the massive debt default in December.
- Argentines' savings are still restricted by limits on
cash withdrawals, imposed to stop a record run on banks last year. Since
the public sector and local businesses have no access to credit, many shops
and factories have been forced to close, driving up unemployment.
- LIFE ON HOLD
- While the peso finds its feet and President Duhalde's
government tries to patch things up with wary multilateral lenders,
life is on hold for millions of people.
- With unemployment now estimated at 22 percent
here centers on jobs lost and dollar savings forcibly converted to pesos
and locked up in the banks. For many, personal plans like weddings and
birthdays have been canceled or scaled down.
- "I had saved up $7,000 to move out on my husband
and get a divorce," laments Rosa, an unhappy Buenos Aires
- As he bought dollars at a foreign exchange house,
a 75-year-old Argentine pensioner who lives in Spain, said that he had
only come to see his daughter for Christmas, but his cash was trapped in
the bank and he could not buy a ticket home.
- "I was supposed to have left a 1-1/2 months
- Others scramble to get around the economic
- Speculators, who locals call "arbolitos," or
little trees, stand on street corners offering black-market dollars to
those who cannot face the long lines at exchange bureaus.
- But the lack of cash to buy dollars meant the feared
dive in the peso's value with Monday's full flotation did not materialize.
The country had a dual system for just over a month with a fixed peso for
exports and a floating peso for the public.
- Confounding forecasts, the peso has strengthened from
its lows right after devaluation to sell on Wednesday at 2.0 to the dollar
on the retail market and 1.95 for large-scale deals. Some had predicted
it would fall as low as 5 to the dollar.
- But traders agree the relative stability is due to the
cash crunch rather than any newfound faith in the peso from people who
have always stashed away their savings in U.S. dollars.
- HYPERINFLATION FEARS
- While prices on imported goods rise, fueling fears of
a return to the hyperinflation of the 1980s, barter markets offering goods
and services from food to plumbing have spread.
- Bankers say Argentina has a month to secure foreign aid
before it falls into the grip of hyperinflation.
- January's 2.3 percent rise in consumer prices in a
accustomed to zero inflation for years and mindful of the daily and even
hourly price rises seen back in the 1980s, showed how panic-inducing a
real bout of hyperinflation would be.
- Meanwhile, the orthodox economy is at a standstill. The
run on the banks until cash limits were imposed in early December emptied
the system of a quarter of its deposits.
- The problems have also spilled over into neighboring
Uruguay, where knock-on liquidity woes at Banco Galicia Uruguay, a bank
owned by Argentina's largest private-sector bank, prompted intervention
by the Central Bank.
- Ratings agency Fitch reported that losses to the
banking system in 2001 may exceed 18 percent of gross domestic product,
or 50 billion pesos.
- In a television interview late Tuesday, Duhalde put a
brave face on the daily protests against the cash crunch and growing
saying: "It's ridiculous to believe a president will step down because
of protests. I'm even less likely to step down if the crisis gets
- Attributing his determination to his Basque roots, the
stocky former vice president from the Peronist Party promised that within
"two months these things that bother people like roadblocks will
and things will calm down."
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