BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh

 You are in:  Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Commonwealth Games 2002

BBC Sport

BBC Weather

Friday, 26 April, 2002, 21:18 GMT 22:18 UK
Argentina cash squeeze tightens
Man resting outside Citibank
Argentine account holders continue their search for cash
Argentina has partially lifted emergency banking restrictions, but severe cash shortages continue to strain the battered economy.

The government allowed banks to reopen for the first time this week on Friday, but deposit withdrawals remained banned, leaving many Argentines with no access to cash until Monday at the earliest.

The Argentine banking authorities have said that banks will be allowed to operate as normal next week.

But the cash shortages have brought much of the economy to a standstill, with many shops and businesses shutting down rather than accept payment in possibly worthless government bonds.

Farmers' protest

They have also imposed further economic hardship on a country already racked by high levels of unemployment after four years of recession.

Riot police stood guard over bank buildings in some regions on Friday as angry crowds protested outside, in a sign of growing social unrest.

Plans by Argentina's farmers to suspend food deliveries in protest over erratic agricultural policies look set to further exacerbate the situation.

The Argentine central bank shut all banks for an indefinite period on 19 April in an attempt to halt a flood of panic withdrawals that threatened to trigger a financial collapse.

Workers were at first able to withdraw money from current accounts using automated teller machines, but most of these are now empty.

Emergency measures

The banking freeze was designed to buy the government enough time to force through legislative changes aimed at stemming the flood of deposit withdrawals.

The Argentine congress earlier this week backed a proposal which would make it more difficult for savers to mouth legal challenges against withdrawal restrictions first imposed in December.

But a separate proposal, under which a proportion of all bank deposits would have been converted into government bonds, was rejected, prompting the resignation of economy minister Jorge Remes Lenicov on Tuesday.

Former Argentine ambassador to the European Union Roberto Lavagna was appointed to as the country's new economy minister - its sixth in a year - on Friday.


Some economists believe that the measures introduced so far will merely postpone a collapse of the banking system.

Attempts to persuade the International Monetary Fund to resume lending - suspended late last year after Argentina missed repayments on parts of its $140bn debt - proved fruitless earlier this week.

The debt default marked the beginning of the present crisis.

See also:

25 Apr 02 | Business
Argentina tightens banking freeze
26 Apr 02 | Business
Brief respite for hard-up Argentines
24 Apr 02 | Business
Economy chief loses the plot
25 Apr 02 | Business
Argentine stories: Patricia Otero
25 Apr 02 | Americas
Argentina takes steps to end crisis
24 Apr 02 | Americas
Argentina president in crisis talks
22 Apr 02 | Business
Argentina treads the tightrope
22 Apr 02 | Business
Argentina 'risks financial collapse'
20 Apr 02 | Business
Argentina closes all banks
26 Apr 02 | Business
Trade negotiator takes the helm
26 Apr 02 | Business
Argentina gets new economy chief
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories