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Wednesday, 13 February, 2002, 12:58 GMT
Argentina crisis package: What do you think?
Argentina's devalued currency is to float freely for the first time in a decade after a week-long closure of the country's banks and currency markets.
The free float of the peso is part of a restructuring plan aimed at restoring economic and social stability to a country racked by economic crisis and bloody street protests since the former government defaulted on debt payments late last year.
Last week, Argentina abandoned a dual exchange rate mechanism which had been in place since early this year.
The change comes as part of a new emergency package aimed at pulling the country out of its worst economic crisis in decades.
The government hopes the measures will help it win up to $20bn (£14bn) in additional aid from the International Monetary Fund.
What do you think of the new crisis package? Can the government secure IMF funds? If you're in Argentina, how will the measures affect you?
This Talking Point has now closed. Read a selection of your comments below.
I think the lack of liquidity in the Argentinean market is destroying the economy and the middle class. Many rich Argentineans had transferred their financial assets to the USA when selling their companies to US and European firms. This means these assets are no longer supporting the Argentinean economy. It is imperative that Argentina and the world community ensure these assets are repatriated and they once again become part of the Argentinean economy. In addition there appears to be a lot of noise about hundreds of millions maybe billions that have been taken in payoffs and deposited offshore by politicians. The Swiss and Caribbean offshore entities should come clean on this one. The people need and deserve their liquidity. The corrupt deserve what should be coming to them.
Argentina's strategy is aimed at securing IMF funds as a stop-gap means of quelling civil unrest. IMF compliance will be akin to rewarding a child for throwing a tantrum when he's eaten all his sweets and wants some more. If - as history indicates - Argentina is unable to behave responsibly with borrowed resources, then those responsible for IMF disbursements should refuse Argentina's request. If Argentina secures further IMF funding her long-term problems will be compounded. In other words - when you're in a hole, stop digging. The country's financial difficulties have been caused by political mismanagement of financial resources. The solution is to put in place a government which is interested in running Argentina in an intelligent and responsible manner. Injections of more outside funds will merely finance further mismanagement and corruption, and will add fuel to Argentina's difficulties.
Danny Kiersz, Argentina
The secret to getting back on track is revamping the system with all brand new policy making. Trying to fix problems through patchwork will not be as effective as starting with a clean slate.
This tactic is clearly no more than a stop-gap solution aimed at short term reduction of civil unrest. It could be reasonably argued that it was Argentina's securing of unserviceable IMF loans that precipitated Argentina's financial downfall in the first place. Borrowing yet more funds might briefly disguise the true situation - but is the financial equivalent of a drug addict's "fix". In other words: things might look better temporarily, but the trade-off will be a grimmer long-term prognosis with a diminished chance of a clean recovery.
Where was the world
last October and
November when there
were floods in
Argentina? A good
part of their GNP
is based on
agriculture and the
land was under water. How do you expect
to pay when there is
nothing to pay with
and how much has
been taken out
of the country by
those who invested
in the country.
The sum of $140 Billion just
does not disappear.
Maybe the rest of the
world should try to
find out where that
$140 billion is and
who put it there!
I am a professional and I feel very bad. I don't trust in Argentina's lack of justice - where 50%of population is illiterate due to the mediocrity and lack of professionalism of our politicians. President Duhalde said "Argentina is in bankruptcy, but he didn't say that they - the politicians - bear the main responsibility for this unfair and irreversible situation. He raised the wages of the deputies, and they continue having privileges and because of this the clashes will continue. Everyone who is able to is trying to emigrate.
Simon Cameron, UK
It would be alright for a country to legislate concerning new business, but changing the rules on previously entered into monetary transactions after the fact seems worse than unacceptable. As I understand it, if you entered into a US dollar or UK pound transaction with a bank in Argentina, you would now find that you no longer own or are dealing in those currencies, but are now dealing in pesos, whose valuation is questionable. I cannot see that anyone in the world would want to deal with such a regime, that meddles in that way in the free trade of currencies and investments. Far from being a suitable corrective action, the actions lead to a loss of confidence as to Argentina's fiscal credibility.
04 Feb 02 | Business
Argentina unveils crisis package
13 Feb 02 | Americas
Argentina reconsiders crisis plans
30 Jan 02 | Business
IMF tells Argentina to cut spending
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