Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: Steve Fancy who wrote (22387)	7/13/2001 3:57:02 PM
From: Tony van Werkhooven	Read Replies (1) \| Respond to of 22640

Steve- Argentina- sounds like a bounce from yesterday's big drop. The problems only appear to get more complex. See following: Argentine Government Proposes Cutting State Workers' Salaries A WALL STREET JOURNAL ONLINE News Roundup Facing mounting skepticism from investors, the beleaguered Argentine government of President Fernando De la Rua struggled Friday to muster badly needed support for its efforts to revive South America's second-largest economy. The U.S., meanwhile, indicated it has no intention of funding a direct bailout for the country. As Latin Storm Rages, Some Areas Find Shelter Mr. De la Rua and Economy Minister Domingo Cavallo faced a near revolt from the president's ruling coalition after proposing late Thursday a new round of spending cuts, including salary cuts for state workers, aimed at helping end a three-year recession . Stocks plunged 8.6% Thursday on concerns the plan will fail amid public opposition. But on Friday, Argentina's Merval Index rose 2.6% to 319.75 in heavy trading volume. In need of money to combat the company's crushing $130 billion in public debt, Mr. De la Rua's new plan calls for cuts in state workers' salaries and pensions -- moves that have prompted outrage from politicians and powerful union leaders. "We aren't the ones who should pay off the deficit, not the worker, not the retirees," said Hugo Moyano, leader of Argentina's largest union, the General Workers Confederation. "It's the people who've made a lot of money in the last few years who should pay, not a worker who earns $200 a month." State workers angry over proposed salary cuts of 8% to 10% rejected the plan and threatened to strike against the proposed measures. Members of the leftist wing of Mr. De la Rua's party were upset that lawmakers and judges would be excluded from the salary reductions. If Argentina fails to cut its spending, or boost the level of its monthly tax collections, it risks losing access to about $40 billion in debt repayment assistance made available from the International Monetary Fund late last year. Officials with the International Monetary Fund said Friday they support the Argentine government's reforms and said that, if fully implemented, they should ease concerns that the country might default on its debts. "We support the government's objective in dealing with a very critical fiscal situation. The actions that they have proposed demonstrate a very clear commitment to try to tackle this problem and I would note that these measures go beyond even their original program objectives," said Thomas Dawson, the IMF's director of external affairs. But Mr. Dawson rejected speculation that the U.S. and the IMF were considering augmenting the international loans made available to Argentina. "I don't believe it's on the table so I don't think it's a possibility," he said. Indeed, separately Friday the Bush administration said that the Argentine government needs to address its own economic problems, apparently signaling the U.S. won't offer direct financial support. National security adviser Condoleezza Rice told reporters that the administration was carefully monitoring the economic turmoil. But she indicated the U.S. has no plans to offer its own package of assistance to help Argentina meet its foreign debt obligations. "The best course of action right now is for Argentina to be able to take the steps it needs to take at home," Ms. Rice said. She said Treasury Secretary Paul O'Neill and other administration officials have been in contact with top government officials in the country, including Messrs. De la Rua and Cavallo. In a note sent this week to Mr. De la Rua, Mr. Bush had offered his own hopes that Argentina will be able to deal with its economic problems, White House spokesman Ari Fleischer said. Both Ms. Rice and Mr. O'Neill have been critical of some of the huge emergency bailout packages put together by the Clinton administration. In those cases, the U.S. contributed direct assistance along with other wealthy countries to increase the size of large rescue packages put together by the IMF. Leaders in Argentina have sought political backing to see the new pay-cut plan through. The recession has reduced tax revenue and the government must trim spending to make its debt payments. Former President Raul Alfonsin, leader of the Radical Civic Union, the most powerful party in Mr. De la Rua's fragile ruling Alliance coalition, came out Friday in support of the spending cuts -- but only, he said, if they don't hurt "the most vulnerable" sectors of Argentina's population. The Radical party "supports the president in this effort," said Mr. Alfonsin, whose support was considered essential to the plan's success. Still, Argentina's unions remain opposed to the plan -- Mr. De la Rua's seventh major cost-cutting effort since he took office in December 1999 -- and have promised protests and other measures to derail it.