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Wednesday, 20 November, 2002, 20:41 GMT
Argentines face price rises
Starving Argentine child
At least eight children have died of hunger
The price of water, power and other basic services in poverty-stricken Argentina is to rise by presidential decree, in an attempt to secure new international loans.

The decree, by-passing legally required public hearings, would lift prices by about 10%.

Argentine economy minister Roberto Lavagna
Lavagna makes painful decisions
"This is a definite decision," said Economy Minister Roberto Lavagna without setting a date.

The International Monetary Fund has asked for a 30% rise before it is prepared to refinance loans owed to it and other multilateral agencies.

Bankruptcy threat

The rises will be a blow for Argentines, some of whom are already starving to death because of the country's economic crisis.

Think tank Fiel on Wednesday estimated that industrial output was 3.4% lower last month than in October 2001.

And Argentine Finance Secretary Guillermo Nielsen warned that the country might go bankrupt without help from international lenders (IFIs).

"If we don't get any help from the IFIs by February we will have a level of reserves where the economy is unmanageable, and by May we will have no reserves," Mr Nielsen told the World Economic Forum's Latin America Business Summit.

Argentina was cautiously praised by the IMF on Tuesday for agreeing to regional government spending cuts and retaining bankruptcy laws, two other key demands.

The IMF halted loans last December, forcing the government to default on much of its $141bn (90bn) foreign debt, the largest government default in history.

Starving to death

Mr Lavagna, who is touring Europe next week in a bid to muster Western support, said the rises would not affect low income households.

But a leading consumer rights group, Adecua, said it would challenge any presidential decree in the courts, which have usually overturned them.

Protests against government and IMF economic policies are expected throughout the country on Wednesday, Argentina's national day.

President Eduardo Duhalde on Tuesday launched a nationwide campaign to combat rising infant malnutrition.

The front pages of the country's press have been dominated in recent days by the deaths of at least eight children who died from hunger in an impoverished northern province.

Argentina, which is considered South America's bread basket, is the world's fifth-largest exporter of agricultural products.

Corporates complain

The government froze prices to slow inflation after January's devaluation, after which the peso lost 70% of its value against the dollar.

Argentina's largely European-owned utility companies have claimed the price freeze is illegal and that it is costing them money.

Foreign firms - like Spain's Telefonica and Endesa, Telecom Italia, France Telecom, Electricite de France and Britain's BG - claim the contracts they signed allowed them to raise rates if the currency was devalued.

The government wants to refinance $15bn in loans due this and next year to the IMF, World Bank and Inter-American Bank.

Argentina defaulted on a further $805m owed to the World Bank last week.

Frances Pless
"My money is in the bank but I can't get it out of the bank."

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Argentina in turmoil


See also:

16 Nov 02 | Business
15 Nov 02 | Business
15 Nov 02 | Media reports
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