Argentina Finances

Imagine a Latin America ruled by leftist governments that are hostile to the United States: Debtor countries there default on loans to big U.S. banks. And some $40 billion in American exports are no longer welcome.

With Argentina's languid public services approaching total inertia, there have been newspaper headlines this week noting that Argentine Airlines is not on strike. That was the good news for a nation caught up in railway stoppages, post office walkouts and slowdowns, along with strikes by doctors, teachers, court workers and other civil servants.

A trade union protest rally against government austerity measures erupted Friday into the worst political violence in Argentina since the restoration of democratic rule in 1983, leaving scores of people wounded. About 20,000 people who filled the downtown Plaza de Mayo, a block from the presidential palace, Friday were listening to speeches when fighting broke out at the rear of the crowd. Police fired tear gas, water cannon and rubber bullets to break up bands of rock-throwing protesters.

As a hurricane of inflation pounds Brazil's economy, wage earners, consumers and savers seek whatever flimsy shelter they can find: They ask the boss for mid-month advances, knowing that their salary will buy a lot less by payday; they stock up whenever possible on food staples and household supplies, whose prices leap frequently.

The Argentine government Wednesday night announced a temporary price freeze, drastic cuts in public spending and a series of other steps to attack inflation of 320% per year. Economy Minister Juan Sourrouille also said that the austral, Argentina's currency, is being devalued by 11.42% to spur exports. In imposing the "price treaty," Sourrouille said prices must remain frozen until Aug. 15, then rise by no more than 1.5% through the end of August and up to 3% in September.

Argentina has made some back payments on its $55-billion foreign debt, easing some of the pressure on U.S. banks that otherwise would have had to shift their Argentine loans to a non-accrual status, bankers said. William Rhodes, chairman of Argentina's 11-member bank advisory board, said Argentine central bank director Daniel Marx "has advised me of this (the payments) and I have heard from other banks that they have been receiving funds."

Police in Brazil on Friday arrested four men and recovered nearly all of the $8 million stolen last month from a Brink's international shipment en route from New York to Argentina. It was one the largest robberies in the history of the Brink's company. The money was recovered by narcotics agents working for Rio de Janeiro's Specialized Police Department. Police did not say exactly how much of the $8 million was recovered.

Argentina reached tentative agreement Tuesday with the International Monetary Fund on a series of measures designed to repair its flagging economic restructuring program and enable it to resume borrowing money from the 151-country organization. The measures, which still must be approved formally by the IMF's executive board, will permit Argentina to borrow about $380 million from the IMF in late March, thus resuming installments on a $1.4-billion IMF loan it negotiated last summer.

The United States granted Argentina a $380-million bridge loan to help it make interest payments on its $54-billion foreign debt, Central Bank President Jose Luis Machinea said Monday. Argentina must pay $490 million in interest on its debt pending from 1987 by the end of March. But private banking sources in Buenos Aires say the country's reserves stand below $400 million.