ECONOMY-ARGENTINA: President to Present Development Plan to IMF

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Jan 16 2002 (IPS) - Argentina’s President Eduardo Duhalde spoke out Tuesday against the “asymmetrical” global policies that he said have translated into trade protectionism for the industrialised North and trade liberalisation for the developing South.

Duhalde said he would not follow the prescriptions of the International Monetary Fund (IMF) for pulling his country out of its deep crisis but would instead present the multilateral organisation with an alternative development plan, one, he said, “that I think they will understand.”

When a government sets out to resolve its problems, it takes for granted that it will receive aid from the multilateral financial institutions to which it belongs, particularly if the country is in a crisis as severe as Argentina’s, the president told the foreign press in Buenos Aires.

If the IMF does not offer the assistance we need, “we’ll see how we manage,” he said.

Duhalde, who Congress named president Jan 2, commented that previous administrations have gone before the IMF with “programmes that failed and promises that were not kept.”

But he assured that his government will approach the IMF with “our own development model,” not an adjustment plan that aggravates the recession, which is in its fourth year.

Shortly after Duhalde made his statements, the director of the IMF’s Western Hemisphere Department, Claudio Loser, said that, “in the context of a coherent economic programme like the one being discussed in Argentina, the support of the IMF would be a reasonable outcome.”

Loser added that the IMF is going out on a limb to support Argentina, though he did not mention what sum of money the institution’s assistance might entail.

Meanwhile, presidential spokesman Eduardo Amadeo stated that the economic programme being drawn up by the Duhalde administration is founded on strong “orthodox” lines and is very well put together from the fiscal and monetary perspectives.

Duhalde said Tuesday that his criticisms of the IMF “are nothing new.”

Argentina should have modified its economic model three years ago, when there was a cash surplus, he said, lamenting that the country had followed the IMF’s recipe, which was “part of the problem.”

“We disagree with the design of the absolutely asymmetrical global policies that have meant protectionism in the North for the products in which we are competitive and indiscriminate trade liberalisation in the South. This is the new order we have created, and we ended the century under domination,” he said.

The president also said “if we want an independent, sovereign country with justice, we have to go forward with our proposals, take a serious attitude and, through all means possible, make them respect us as we respect all countries.”

In describing the development model his administration plans to take before the IMF, Duhalde said that it is similar to the Chilean model.

The development plan will involve characteristics of an open economy in some areas, and of a protectionist economy in others, particularly domestic production. Duhalde said he would work closely with the business sector.

He stated that he had been calling since 1996 for an end to the policy that pegged the Argentine peso to the dollar at one-to-one parity, a law that was scrapped just last week.

Duhalde said that by 1996 the policy had already achieved the main objective of overcoming hyperinflation. “They accused me of trying to isolate Argentina from the world,” he added.

The new Argentine president, a member of the Justicialista (Peronist) Party, said the country is living a serious crisis that has put it “on the brink of a bloodbath”, with violent incidents that he described as symptoms of a “pre-anarchic” society.

“We feel like we are standing in a swamp and we don’t know yet if we’ve touched bottom,” he admitted before a press conference of nearly 100 foreign correspondents.

With respect to the government-imposed banking limits, Duhalde said his administration is studying measures to roll back some of the restrictions on access to deposits in order to jump-start the economy.

“I am confident that no bank will collapse,” he said, though admitted that the money the savers are demanding is not at the banks, but has been loaned and does not come due until four and a half years from now, on average.

He said Congress and the justice authorities should investigate the capital flight and the run on the banks that occurred late last year, phenomena that forced the Fernando de la Rúa government to impose the first banking restrictions – 17 days before De la Rúa resigned on Dec 20.

Banks have been the target of much Argentine anger. Protesters in two provinces – the central-eastern Santa Fe and northwestern Jujuy – trashed banks, breaking windows and destroying computers and automatic teller machines, in violence similar to incidents Jan 10 in Buenos Aires.

Some 7,000 people mobilised in the Santa Fe town of Casilda, throwing eggs at the local offices of the Credicoop and Galicia banks, while a more violent contingent threw rocks at the Bisel bank and nearby retailer shops.

The riot police, who used tear gas and rubber bullets, brought the protesters under control. The police were heavily armed and wore bulletproof vests.

Similar scenes played out in Jujuy province, where a demonstration staged by government employees, who have yet to collect their December wages, escalated into attacks against at least five banking institutions and against a company that provides public services.

The protesters threw computers, bookshelves, and office furniture into the streets and set them on fire.

Also in Jujuy, rioters destroyed the façade of the provincial energy company, which has repeatedly raised its rates despite complaints from local residents. In this case, the police did not intervene.

Argentina’s deep recession has lasted 42 months and unemployment now affects 20 percent of the economically active population.

Socio-economic indicators like these have worsened in recent months, contributing to the profound institutional crisis that put five different presidents in the ‘Casa Rosada’ (presidential palace) within a span of just 12 days.