Alfons'in's political gamble. Argentine officials say there was no alternative to harsh measures he has prescribed for economy
Argentines are reacting with feelings ranging from deep scepticism to bubbling optimism following the recent announcement of anti-inflation measures. The measures include the introduction of a new national currency, the austral, and a wage-and-price freeze. They are aimed at bringing about a dramatic fall in the country's record inflation rate of 1000 percent which is among the highest in the world.
President Ra'ul Alfons'in appears to be taking a major gamble that the majority of Argentines will not turn against him in the months leading up to November's key midterm elections.
Government officials insist that there was no alternative to introducing the measures. But privately they admit that their main problem in the coming weeks will be to sustain the positive expectations of the people in the midst of a growing offensive from the powerful trade-union movement.
Union leaders have warned of a wave of strikes and have rejected the government's wage plan, arguing that the measures would only succeed in bringing about a further fall in real salary levels.
``We've got nothing to offer Argentine workers but the prospect of an end to inflation, because as long as it persists there can be no investment, no jobs,'' said Undersecretary for the Economy Jose Luis Machinea.
Indeed, President Alfons'in described his ``battle plan'' on nationwide television Friday as a desperate last bid to save the country's nascent democracy from social disintegration.
``We are going to defeat the greatest danger -- the scepticism which has been the result of too many years of frustrations, errors, and decadence,'' he said in what was widely accepted as his most important policy statement since he took power in December 1983.
Persistent high rates of inflation have meant that Argentina, once one of the richest nations in the world, has chalked up a foreign debt of $48 billion and plunged into a severe recession.
Economists estimate that over 30 percent of the Argentine population find it hard to pay the family bills, which explains why the government was forced to launch an emergency food program last year.
``We've lived with high inflation for so many years. . . . It's living without it that seems unrealistic. Argentines have developed habits you just can't change overnight,'' commented Samuel Haedo, a young graduate engineer who considers himself to be part of Argentina's ``inflation generation.''
``With inflation like ours, a greater number of poor get poorer and a smaller amount of rich get richer,'' commented Juan Carlos Casas, Economics Editor of the daily La Nacion.
Four-digit inflation has been accompanied by a 3-percent drop in industrial activity in the first quarter of this year and a 15 percent decrease in overall investment. Meanwhile, state finances have suffered from widespread tax evasion as a result of the emergent ``black economy'' of speculators and self-employed small tradesman for whom survival has meant not declaring income.
Friday's measures were thus welcomed by Argentina's creditors and local businessmen as a concerted effort to stabilize the economy and bring about a much needed recovery.
``This is going to work because we've all realized that when inflation gets to this level there is simply no alternative but a complete overhaul of the economy capable of putting us back on our feet,'' commented Alfredo Feris, owner of a small supermarket chain.
President Alfons'in confirmed Friday that the measures would be accompanied by a tight monetary and fiscal policy as agreed upon with the International Monetary Fund in order to reduce the budget deficit which is estimated to be over 12 percent of the gross domestic product.
The government launched an unprecedented publicity campaign last weekend aimed at securing public support for the measures.
Anticipation of Alfons'in's announcement provoked a run on local bank deposits and panic buying by consumers in most shops and supermarkets.
Prices at the beginning of this week were falling again as traders feared a clampdown by government inspectors. Throughout the weekend consumers were asked to denounce anyone breaking the controls.