Strike Cripples Argentina's Economy [STOPNATO.ORG.UK]

[Bill Howard]

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Subject: [mayday2k] AP:Strike Cripples Argentina's Economy [STOPNATO.ORG.UK]


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Subj:    [mayday2k] AP:Strike Cripples Argentina's Economy
Date:   3/21/01 3:37:50 PM Mountain Standard Time
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Strike Cripples Argentina's Economy
By KEVIN GRAY


  
BUENOS AIRES, Argentina, March 21 (AP) - Argentina's third economy minister 
in almost as many months sought political support Wednesday for his efforts 
to end the nation's deep recession, unbowed by a public workers' strike on 
his first full day on the job. 

Domingo Cavallo huddled with political leaders even as the capital and other 
cities nationwide ground to a halt in protest over 15 months of cost-cutting 
measures by the government of President Fernando De la Rua. 

In Buenos Aires, classrooms sat empty during a teacher walkout, rush hour 
traffic was snarled and trash piled up on street corners. Unions representing 
trash collectors, airline workers and public school teachers all heeded the 
work stoppage. 

Two economy ministers under De la Rua have resigned this year after failing 
to pull Argentina from a long slump, and workers complain they've had enough 
of spending cuts and tax hikes as the recession now stretches into its 33rd 
month. 

``Cavallo represents more of the same. The government doesn't want to do 
anything for the people,'' said Cecilia Noce, a fifth-grade teacher who can 
barely live on her $330 a month salary. 

As the third economy minister under De la Rua, Cavallo met Wednesday with 
provincial governors and appealed to lawmakers for special powers from 
Congress to help end the crisis. 

He will need all the support he can get after his predecessor, Ricardo Lopez 
Murphy, lasted only two weeks on the job, booed out of office after unveiling 
a harsh plan that would have slashed public spending by $4.5 billion. 

Critics said Lopez Murphy didn't have the backing for such deep cuts, but 
doesn't think Cavallo will make the same attempt. 

``Cavallo has expressed that he will first gain political support before 
announcing any major economic measure ... in the meantime, given the prestige 
that Cavallo brings to the government, the markets are likely to wait,'' said 
Carlos Janada, a New-York based economist with Morgan Stanley Dean Witter. 

Cavallo has yet to unveil his plan to kick-start the economy, but the 
54-year-old Harvard-trained economist is still admired on Wall Street for his 
first performance as economy minister from 1991 to 1996 when he rescued 
Argentina from four-digit inflation. 

At the time, Cavallo led an ambitious privatization of state enterprise and 
also pegged the peso at one-to-one to the dollar, stabilizing the local 
currency. 

The new economy minister wants Congress to give De la Rua extraordinary 
powers to reorganize government agencies, sell its assets and reform tax laws 
by executive decree. 

Argentine media reports said Wednesday that Cavallo's chief aim will be to 
cut tax evasion in order to fill depleted state coffers. 

He reportedly favors privatizing tax collection to make it more efficient and 
eliminating Argentina's 21 percent value-added tax in favor of a one-time 
sales tax. 

Among other proposals Cavallo is studying is a possible reduction in the 
capital gains tax for companies, the reports added. 

Saddled with more than $120 billion dollars in debt, Argentina must meet 
fiscal deficit targets set by the International Monetary Fund to retain a $40 
billion aid package delivered by international lenders last year. 
 
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