Argentina hit by protests

People have been queuing to open new bank accounts

Several thousand angry workers, farmers and small business people have taken to the streets of Buenos Aires to protest against the government's tough measures to prevent the economy from collapsing.

The country is paralysed

Osvaldo Cornide
Union leader

The spontaneous outpouring of anger was a prelude to a general strike organised by Argentina's two leading trade unions which are incensed by curbs on cash withdrawals from banks, a delay in pension payments and other economic measures.

"The country is paralysed," said one union leader, Osvaldo Cornide.

"There's no money, there's no work, and with these measures that restrict deposits, there is no cash to be spent."

Unemployment soars

The protests came as new government figures revealed that unemployment has jumped to 18.3%, up from 14.7% one year ago.

The jobless total is now at its highest since Argentina's latest recession began in mid-1998.

However, it remains just below its all-time high of 18.4%, recorded in May 1995.

Widespread joblessness has exacerbated the economic hardship suffered by many Argentines since the onset of the downturn.

Cash freeze

Ahead of the protests, long queues had formed outside the country's banks.

Economy minister Cavallo is not popular

But rather than queuing to withdraw their money, people were instead seeking a way to get around the government's ban on cash withdrawals in excess of $1,000 (£690) a month.

Opening more bank accounts and simply transferring money into them seemed like an obvious choice to many, to the despair of the government which had put the measure in place to halt a run on the banks - which itself had been spurred by rumours that limiting measures were imminent.

Financiers said the economic measures did little for the government's popularity, but they were nevertheless good for the economy.

"People may not like them, but the measures are working," said a spokesman for a leading bank in Argentina.

"The withdrawal of funds essentially stopped last week."

Consumer spending

In the short run, the freeze on people's money may have averted a debt default and a devaluation of the Argentine peso currency.

However, refusing people access to their cash can only buy the government time, and it may even be damaging rather than beneficial in the long run, said analysts.

The measures have heightened social tension, and consumer spending has been brought to an abrupt halt since people have no money for shopping.

This could worsen the country's recession, a consequence that will do little to help the government pay off the country's $132bn debts.