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

Saturday, 2 February, 2002, 02:13 GMT
Argentine economic package delayed
Demonstration against government policies
Economic crisis has led to mounting social unrest
Argentina's government has delayed a package of emergency economic measures and declared two days of bank holidays after its freeze on bank accounts was ruled unconstitutional by the Supreme Court.

The long-awaited measures were due to be announced on Saturday but were thrown into doubt by the court ruling, which analysts said could threaten the country's banking system.

We have to disarm a time bomb

President Eduardo Duhalde

The government immediately announced that banks and foreign exchange houses would be closed on Monday and Tuesday, to prevent any run on bank deposits.

The BBC's Peter Greste in Buenos Aires says the government has gone into crisis mode, amid fears of an angry public response.

The row centres on restrictions imposed two months ago which limited the amount of money people can take from their accounts to $800 a month.

The restrictions are extremely unpopular, prompting often violent protests and leaving some people without enough cash to buy basic provisions.

President Eduardo Duhalde
Duhalde had promised some easing of the restrictions
President Eduardo Duhalde had promised the government would look at ways of easing the banking restrictions.

But the surprise court decision opens the door to account holders get at their money.

President Duhalde called the court's decision "extremely serious".

He compared the country's banking situation to a "time bomb".

"We have to disarm a time bomb. If it goes off it's not just going to affect people with deposits, but the whole productive system," he said.

Freeze 'irrational'

The court ruled in 5-0 in favour of a group of plaintiffs who had demanded access to their savings.

It said the executive decree authorizing the limits breached citizens' rights to have access to their savings, describing it as "irrational" and that it virtually "annihilated" the right to private property.

Mass protest in Buenos Aires
Thousands march almost daily in protest
A Supreme Court spokesman said the ruling meant that all Argentine banks would be forced to permit full withdrawals of deposits.

But the Economy Ministry interpreted the ruling as applying only to plaintiffs who had filed a lawsuit.

"Well obviously that cannot be good news," said Marco Santamaria of investment bank Lehman Brothers in New York.

"If it forces the banks to open up their doors that would clearly create very significant difficulties for the government and more specifically for the banks themselves who are not going to be able to meet the withdrawals."

Presidential promise

The ruling came just hours before Mr Duhalde - Argentina's fifth leader since December - was due to address the nation about his economic crisis strategy.

The address was swiftly cancelled, though the president made a short speech to journalists.

It is now unclear when his economic plans will be made public.

Finance Minister Jorge Remes Lenicov also cancelled a planned trip to the US, where he had been hoping to win international backing for Argentina's emergency economic measures.

The government had been expected to announce how it will repay large debts taken out in US dollars, how it will return some frozen deposits, as well as some possible tax breaks to spur an economy stuck in recession.

President Duhalde is preparing to lift restrictions on access to individual workers' payroll accounts, a union leader said.

"The government has decided to free all salaries" from the restrictions, General Workers' Confederation leader Rodolfo Daer said after meeting Mr Duhalde at the presidential residence.

The BBC's Bob Berry
"Customers are getting impatient"
The BBC's Peter Greste in Buenos Aries
"There are people marching across the city"
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