|
||||||
|
|
|
|
|
|
|
|
|
 |
 |
 |
 |
IMF Hopes Argentina Will Move Quickly Back
in Business, Argentina Calms Down and the Peso Perks Up |
 |
Argentina Says Banks Won't Close
By:
Laurence Norman
Buenos Aires, Argentina –– Argentina's economy minister moved Sunday to soothe fears that the country's banks were too unstable to open, saying "the financial system is working solidly." Roberto Lavagna told reporters late Sunday that banks would maintain their full operations Monday, after a weekend of rumors that the Central Bank might have to declare a fresh banking holiday to prevent the collapse of Argentina's cash-strapped financial system. On Friday, reports circulated that several Argentine banks are on the verge of closure because of a lack of operating capital and reserves. Those rumors led thousands of depositors to withdraw what they could on Friday and again throughout the weekend, leaving many automatic teller machines in the capital empty of cash. However Lavagna dismissed the idea of the imminent closure of any banks, saying, "the financial system is working solidly" in Argentina. Argentina's banks were last closed for a week before opening on April 29. As a sign that no fresh crisis was about to erupt, Lavagna flatly denied reports indicating that the Central Bank had stepped into prop up several local banks. Argentine banks lost $20 billion in deposits between March and November. A $2.6 billion loss on Nov. 30 forced former president Fernando de la Rua to impose monthly limits on withdrawals and overseas capital transfers. Those restrictions, tightened by current president Eduardo Duhalde, have slowed commerce to a trickle and have forced thousands of companies to default on their debts and close their doors. Argentina's economy has contracted by about 10 percent during its four-year recession, leaving about 30 percent of the urban workforce unemployed; the IMF expects economic activity to shrink by as much as 15 percent this year alone. Lavagna's comments came after he admitted that a long awaited government plan to free up people's deposits had been abandoned. The government had been working on a scheme to compensate depositors whose savings accounts are frozen with government bonds and IOUs backed by foreign banking companies, the Clarin newspaper reported on Sunday. However Lavagna said in an interview published Sunday that the cost of such a scheme is "too great." He also said the plan had been partly scuttled by the reluctance of banks to sign up to it. However he promised his economic team would work in the coming days on a new plan that will loosen the banking restrictions as much as possible. On Sunday, Duhalde said on the television program "Hora Clave" that he wants the economic team to study the idea of offering savers the chance to use their trapped savings to purchase government property. "The state has thousands and thousands of goods that it doesn't use. We should study how we can compensate people's savings with the state's property," he said, giving government-owned land and furniture as an example. Argentina's banking system has been under severe pressure over the last year, with their situation worsening when Argentina decided to default on its $141 billion public debt and then devalue its currency. As part of the devaluation, the government ordered dollar-denominated bank deposits to be converted into pesos at a higher rate than dollar-denominated bank loans, forcing the banks to absorb a large loss. Clarin reported earlier this month that the IMF expects Argentine banks to lose by the end of this year more than $17 billion of the roughly $21 billion in assets they reported on Dec. 31, 2001. FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Action on Aging distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.
|
