Argentina pledges to pay debt

President Fernando de la Rua of Argentina promises to take stern measures to reach a budget deficit of zero (currently 132 bn USD) by the end of 2002.

President Fernando de la Rua and his Minister of the economy, Domingo Cavallo, revealed a bold plan to reduce the country’s 132 bn USD deficit to zero. The new “ordered restructuring” will put an end to the irresponsible policy followed by the previous government under Carlos Menem.

The restructuring will begin with an income of 4 bn USD from government bonds with a 7% coupon rate. These 4bn dollars will finance a social intervention policy while at the same time vigorous measures will be taken to recover back taxes owed to the government and a tightening of fiscal measures to make the system more efficient. As usual in Latin America, the richer members of the population escape from fulfilling their obligations, leaving the middle class with the burden of supporting the economy.

The Minister of the Economy claimed that the people of Argentina will support the schemes. “The Argentinean people have decided to support the zero deficit budget. This will happen, if Argentina starts to grow again”.

The President of the Argentine promised to keep to the agreements signed with international financial institutions. “Argentina will not follow a policy of non-payment…We will honour our obligations”, he said at a meeting of 400 economists and bankers in Banco Nacion on November 1st.

Further measures will be taken to stimulate the internal economy, such as a reduction on credit card purchases of 5% and a 3% reduction on purchases with cash cards or ATM.


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