Hernan Etchaleco: New Argentine Government struggles to prevent economy collapse

In an attempt to help a general financial crack, the new Argentine administration headed by Peronist Eduardo Duhalde, announced Thursday new banking restrictions to limit cash withdrawals. As per the new schedule, Argentineans will only be able to take out up to 500 US dollars per month from their savings deposited in banks.

On the other hand, Treasury authorities released a new schedule to return frozen long tail deposits in foreign currencies, from 2003 onwards. Saving accounts were also confiscated in excess of 3.000 US dollars and will be returned by the same date.

“It is a hard situation, but we have to tell our people the truth”, said Jorge Tedesca, Vice – Minister of Economy, to a local radio station. Nevertheless, analysts agreed to evaluate new measures as a victory for the banks after the losses they suffered by the end of the last year.

By the time this measure was announced, European Governments and investing companies increased their pressure over the local authorities to introduce amendments to the new economic plan, which includes a 30% devaluation of the peso. The new official exchange rate fixed in 1.40 pesos to the dollar, made foreign companies from the United States, Spain, France and Italy, face serious losses as their dollar income is converted into a an uncertain value.

With national finances crumbling fast, banks in Argentina remain paralyzed and once again, “banking holiday” has been decreed for Friday. Monetary reforms could open on Monday, after a long “exchanging holiday” started by December 21.

Hernan Etchaleco PRAVDA.Ru Argentina

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