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Friday, 2 August, 2002, 05:27 GMT 06:27 UK
Uruguay hit by strikes and violence
Uruguayan protesters throw stones
Uruguayans are angry over continuing economic turmoil
There have been outbreaks of looting in the Uruguayan capital, Montevideo, as workers held a general strike in protest at the country's worsening economic crisis.

Witnesses said protesters threw rocks and robbed supermarkets, bakeries, butchers' shops and a pizzeria before police moved in.

The violence came two days after the government ordered banks to close to try to stop people withdrawing savings.

The tiny South American state ground to a halt as workers demanded higher wages and cash to prop up the national banking system.


The strike was unanimously approved by the 42 unions we represent

Juan Castillo
Union leader
Only health, education and some bank employees failed to walk off the job on Thursday morning to demonstrate against the government.

"The strike was unanimously approved by the 42 unions we represent," said union leader Juan Castillo, a member of Uruguay's largest labour movement umbrella group, PIT-CNT.

The Uruguayan Government closed the country's banks on Tuesday and does not plan to open them again until next week.

"Our intention is first of all to create some breathing space," the country's Economy Minister, Alejandro Atchugarry, said during a speech on Wednesday.

Cash machines were switched back on during Wednesday to allow people to collect their salaries.

Latin fever

Uruguay's troubles are intensifying, along with fears that the Latin American region faces a potential meltdown.

On Thursday, the International Monetary Fund (IMF) was discussing fresh loans with Uruguay, as well as Brazil and Argentina.

Alejandro Atchugarry, economy minister
Atchugarry is trying to unite his country
Brazil is being buffeted by fears that it could default on $250bn public debt if a left-winger wins the October presidential election.

"I continue to favour support for Brazil and other nations that take appropriate policy steps to build sound, sustainable and growing economies," said US Treasury Secretary O'Neill, who is keen to show his support for the Latin American countries after a gaffe last weekend.

A spokesman for the IMF said the Fund was considering new loans or accelerating payments on existing loans agreements for Uruguay.

Local newspapers in Uruguay have been reporting that the country was to receive a $1.5bn from the IMF next week, thanks to pressure from the US Treasury.

However, the spokesman said that press reports of "imminent" aid to Uruguay were "over-enthusiastic", but added: "There is a sense of urgency that things need to be done."

Uruguay has already received a $3bn support package from the IMF earlier this year.

Bank breather

The closure of the banks risks inciting further panic in the country, as people remain unable to access their savings.

Withdrawals have already stripped hundreds of millions of dollars from the country's financial system.

The government is in the midst of debating further cuts in public spending, while also trying to boost morale in the country

"And as Uruguayan citizens, we are also well aware that our country is united, that our people are willing and have been willing to work to solve the problems," said Mr Atchugarry.

He added that the problems were "to a large extent the result of difficulties that our region has been experiencing".

Nose-dive

During the past few months deep recession in Argentina has knocked confidence in the economies of Uruguay and Brazil.

Currencies in the region have taken a nose-dive as investors are increasingly concerned that Argentina's problems have been exported to neighbouring countries.

Brazil's battered currency, the real, rebounded from record lows on Thursday on hopes of an new IMF loan.

It strengthened by 6% to 3.270 against the US dollar, while Argentina's peso rebounded slightly from Wednesday's trade.

The Uruguayan peso has recovered slightly to 28 to the dollar, since losing 14% of its value on Tuesday after the banks were closed.

But it has lost about half its value against the dollar since the lifting of foreign exchange controls in mid-June.

Three years of recession in the country have left one in four Uruguayans unable to meet basic food needs or pay home bills.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Tom Gibb
"This is one of several looting incidents during a day of strikes and protests"
See also:

31 Jul 02 | Business
31 Jul 02 | Business
31 Jul 02 | Business
24 Jul 02 | Business
23 Jul 02 | Business
20 Jun 02 | Business
27 Jul 02 | Country profiles
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