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Friday, 20 July, 2001, 14:54 GMT 15:54 UK
Argentina softens economic reforms
Demonstrators block a road in Buenos Aires
Workers protest against plans for huge pay cuts
The Argentine government is to soften its belt-tightening economic reforms after two days of crippling strikes and protests.

The government said that austerity measures were necessary to balance the budget and avoid defaulting on the country's $128bn (90bn) debt.

Transport and other public services were brought to a virtual standstill in Argentina on Thursday as trade unions staged a general strike in protest against government spending cuts.

But lawmakers within the ruling coalition have calmed the uproar by telling a local radio station that the government has decided to ease the measures.

The government will officially announce the amended measures - which include an easing on the cuts to retirement benefits - later in the day.

Salary cuts

A three-year recession has sapped Argentina's ability to repay its debt and undermined investors' confidence in the economy.

Opposition Governor Carlos Ruckauf and Argentine President Fernando de la Rua
President De La Rua's reforms have caused chaos
An atmosphere of crisis has enveloped the country since Argentine stocks tumbled last week on worries about the country's long-term solvency.

In response, President de la Rua announced an austerity package, including 13% cuts in state salaries and pensions, aimed at wiping out the budget deficit.

Markets and investors have mostly welcomed the measures, but many Argentines have found it harder to accept the seventh austerity plan in two years.

And doubts had been growing whether President Fernando de la Rua will be able to get the measures through Congress in any case.

Mass protest

Opposition unions have been protesting against the cuts for the past week.

The head of the General Workers Confederation, Hugo Moyano, said Argentina's political and economic leaders were bent on destroying Argentina and its workers.

Police stand guard during the 24-hour strike
Police were deployed to stop protests spiralling out of control
"We are going to fight to keep them from punishing us," he said.

Police have been deployed on the streets of Buenos Aires, where workers blocked roads in anger at planned reductions in wages and pensions.

Many buses and trains failed to run, government offices remained largely empty, and hospitals dealt only with emergencies.

Government spokesman Juan Pablo Baylac criticised the strikers, saying they "give nothing to Argentine society".

The BBC's Tom Gibb
"How, many Argentinians are asking, did their once prosperous country get into this mess"
See also:

19 Jul 01 | Business
Argentina's corporate bail-out
17 Jul 01 | Business
Argentine austerity plan backed
12 Jul 01 | Business
Argentina debt sparks foreign fears
09 Jul 01 | Business
Currency nerves hit emerging markets
20 Jun 01 | Business
Argentine currency fears grow
19 Jun 01 | Business
Argentina switch rattles currencies
13 Jul 01 | Business
Argentina minister appeals for calm
20 Jul 01 | Business
General strike paralyses Argentina
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