Word: menem
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...Argentina the post of Economic Minister has become almost as star-crossed as the hyperinflated economy. The previous officeholder, Miguel Roig, 68, died July 14, just six days after he joined the Cabinet of incoming President Carlos Saul Menem. Roig's successor, businessman Nestor Rapanelli, 60, had been on the job only three days last week when newspaper reports disclosed that a judge in Venezuela had put out a warrant for his arrest in connection with a $6 billion trade-fraud scheme...
Just 36 hours after Menem's address, his administration announced the first steps of "unusually severe, exceptional and emergency" measures designed to break the nation's hyperinflation (114% for June alone) and to restore confidence in its virtually insolvent government. Among them: a 90-day wage- and-price freeze, a 116% devaluation of the austral to 650 vs. the U.S. dollar and an aggressive privatization of most state-run companies. Because the end of many government subsidies will bring unavoidable price increases for some goods and services, all workers will be given a bonus of 8,000 australes...
...early last week, Menem's economic medicine was already showing some positive effects. On Monday the black-market rate for dollars dipped below the official exchange rate for the first time since the austral plan was implemented by former President Raul Alfonsin in 1985, demonstrating credibility in the currency's new valuation. Investors and bankers were favorably impressed by the seriousness of the Peronist leader's austerity plan, which prompted the Buenos Aires stock exchange to rise 6.5% in a single day and sent monthly interest rates down 44 points...
Most foreign bankers have greeted Menem's plan with hedged optimism. But since Argentina has failed to keep up its payments to the International Monetary Fund and the World Bank, neither agency is eager to issue fresh credits without some proof of economic progress. "What's announced on paper can be very different from the results," said a U.S. credit analyst...
...stem the government's deficit spending, which reached $9.7 billion last year, Menem plans to increase revenues by simplifying the tax-collection system and increasing levies on exported goods. But most economists believe that Menem's most important task will be to privatize Argentina's inefficient state-owned monopolies, which are losing $4 billion annually. Menem may get the power to do so if the Argentine Congress approves a new emergency law that would give him almost unlimited control over the nationalized companies. But Menem has so far offered no details about his privatization drive. Those particulars are not likely...