Thursday November 28, 1985,
The Charlotte Observer,
CASH-STARVED ARGENTINE PROVINCES TURNING OUT THEIR OWN MONEY
By Andres Oppenheimer, Knight-Ridder News.
MIAMI -- Two remote Argentine
provinces, short of cash to pay
public employees, have come up with an easy solution.
They're printing up their own money,
to the chagrin of the
national and international banking authorities.
"We are paying all our public
employees with provincial bonds,"
Roberto Romero, governor of the northern Argentina province
said in a telephone interview. He said Salta started printing
IOUs because it wasn't getting sufficient federal currency
"People can change these bonds
for money at any bank," Romero
said. "They can use them to shop at supermarkets and to
buy cars or
any other products."
The Argentine government is not
smiling, and world bankers are
worried that other cash-starved states will copy Salta's
extravaganza and jeopardize Latin efforts to curb inflation
huge foreign debts.
The International Monetary Fund
(IMF), the world's main financial
inspector for debt-ridden countries, was concerned enough to
the issue in recent talks with the Argentine government, said
in Argentina and Washington. The IMF does not comment on
with individual countries.
After Salta started quietly issuing
its own IOUs in September
last year, the nearby province of La Rioja started printing
bonds too. Four other Argentine provinces have either begun
similar programs or are preparing to do so.
In all cases, the bonds are good
only within the province where
But the government of President Raul
Alfonsin says the provincial
bonds are expanding the country's money supply and are
efforts to remove Argentina from the list of world inflation
Earlier this year, Argentina had a 1,000% annual inflation
Alfonsin made headlines worldwide in
June when he launched an
austerity program built around a commitment to stop his
from printing money. Since then, inflation has dropped to 3%
a record low in recent history.
The bonds printed in Salta come in
denominations of 10, 100, and
1,000 australes, the same as ordinary Argentine currency
pay no interest and can be either exchanged for Argentine
used to buy goods.
Romero, of the opposition Peronist
Party, and officials of other
provinces claim their bonds are not really new currencies
are no good outside their provinces.
a comment to John Turmel