Power bills jump 640 p.c. in Argentina

Press, 11 July 1989, Page 10

Power bills jump 640 p.c. in Argentina

NZPA-Reuter Buenos Aires Argentina’s new Government has halved the value of the country’s currency against the United States dollar and decreed stinging increases in charges for public services to halt runaway inflation.

Just 36 hours after taking office, President Carlos Menem, who had earlier wa. ned Argentines of “major economic surgery without an anaesthetic,” raised gas and electricity charges by up to 640 per cent. But the price of bread and other basic foods was to be cut under a Governmentimposed freeze which returned prices to their level of a week ago, the Economy Minister, Miguel Roig, announced in a television address. The austral was fixed at 650 to the United States dollar, down from 301 previously. The austral had already lost 95 per cent of its value against the dollar since February, when the previous Government’s so-called “Spring Plan” collapsed. Mr Roig said the devaluation would ensure Argentina’s exports remained competitive in world markets.

Workers would receive a once-off payment of 8000 australs ($20.58) to soften the impact of the measures, Mr Roig added.

The Government would also ask the congress to declare a “state of economic emergency” giving it sweeping powers over Argentina’s mammoth State companies.

Mr Menem, a flamboyant provincial governor from Argentina’s poor northwest, inherited a monthly inflation rate of over 100 per cent, widespread unemployment, stagnant industry, and reserves of only SUSISO million. “Our State is broke,” Mr Roig said in announcing the plan. Mr Menem shocked his populist supporters in the Peronist Party by appointing Mr Roig, a former chief executive of the Argentine multi-national Bunge y Bom, and other businessmen and conservative politicians to top Government jobs.

Argentina has a foreign debt of SUS6O billion and owes international banks some SUS3.S billion in unpaid interest since April, 1988. The former President, Raul Alfonsin, the first elected leader in 61 years to hand over to a democratically-chosen successor, was forced to cut his term short by five months due to the mounting economic crisis.

Argentina, where living standards have traditionally been among LatinAmerica’s highest, was rocked by violent food riots in May in which 15 people died and hundreds were injured.