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Sweeping Austerity Measures Decreed to Revitalize Salvador

January 23, 1986|United Press International

SAN SALVADOR — President Jose Napoleon Duarte has announced sweeping austerity measures to revitalize El Salvador's war-ravaged economy.

He told a news conference Wednesday that details of the program will be made public later.

"I'm willing to make the decisions that history demands," Duarte said in a television and radio address in which he outlined the program Tuesday night. He called on his countrymen to make the necessary sacrifices to make the program work.

"Together, you and I can make a miracle of retrieving the country," he said in reference to the country's difficult economic situation.

The U.S.-backed austerity program included a currency devaluation, 50% increases in gasoline prices, a one-year moratorium on luxury imports and "emergency taxes" to pay for the six-year-old civil war.

To counteract expected popular discontent with the measures, Duarte announced a $30-a-month pay raise for public employees, price controls on basic goods such as rice, sugar, beans, milk and corn, and the freezing of rent for low-income housing.

The program was not as harsh as originally planned because of pressures by leftist unions and conservative businessmen, who jointly oppossed the package, diplomatic sources said.

The importation of cars and other, undisclosed luxury products made outside Central America will not be permitted for one year in an effort to trim the nation's trade deficit, which had swelled from $35.2 million in 1983 to more than $300 million in 1985.

In addition, the program devalues the local currency, the colon, and institutes a single exchange rate of five colones to the dollar.

A special "emergency tax" to pay for the six-year-old civil war will also be levied on coffee, which accounts for nearly 70% of Salvadoran foreign earnings.

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