Court halts Argentine price rises

More than half of the population are now living in poverty

An Argentine court has blocked price rises for electricity and gas which were ordered by the government last month.

The court said the presidential decree which had been used to increase the rates was illegal in Buenos Aires, and the ruling is expected to be extended across the rest of the country.

The move is likely to be a blow to foreign-owned utility firms, and to the International Monetary Fund (IMF).

The IMF had asked for prices to be lifted before it was prepared to refinance loans owed to it and other multilateral agencies.

Utility firms have also said that prices rises were needed for them to be able to maintain a normal level of service.

Poverty

Prices were frozen in January to slow inflation after the devaluation of the peso, which saw it lose 70% of its value against the US dollar.

But Argentina's largely European-owned utility companies claimed the price freeze was illegal.

Last month's presidential decree had allowed a 9% increase in electricity rates and a 7% rise in gas rates.

But the price rises were passed into law without holding public hearings.

The severe recession gripping the Argentine economy has led to more than half the country's 36 million people living in poverty, and hunger has become a serious problem.

Debt crisis

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

The IMF is demanding that Argentina put in place a programme of economic reform before agreeing to extend new loans.

Last month, Argentina said it could not meet its obligations with the World Bank and made only an interest payment of $79.2m rather than the $805m due.