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
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 of Salta,
said in a telephone interview. He said
Salta started printing its own
IOUs because it wasn't getting sufficient
federal currency fast
"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."
government is not smiling, and world bankers are
worried that other cash-starved states
will copy Salta's financial
extravaganza and jeopardize Latin efforts
to curb inflation and pay
huge foreign debts.
Monetary Fund (IMF), the world's main financial
inspector for debt-ridden countries, was
concerned enough to bring up
the issue in recent talks with the Argentine
government, said sources
in Argentina and Washington. The IMF does
not comment on negotiations
with individual countries.
After Salta started
quietly issuing its own IOUs in September
last year, the nearby province of La Rioja
started printing its own
bonds too. Four other Argentine provinces
have either begun adopting
similar programs or are preparing to do
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 undermining
efforts to remove Argentina from the list
of world inflation leaders.
Earlier this year, Argentina had a 1,000%
annual inflation rate.
headlines worldwide in June when he launched an
austerity program built around a commitment
to stop his government
from printing money. Since then, inflation
has dropped to 3% a month,
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 bills. They
pay no interest and can be either exchanged
for Argentine currency or
used to buy goods.
Romero, of the
opposition Peronist Party, and officials of other
provinces claim their bonds are not really
new currencies because they
are no good outside their provinces.
a comment to John Turmel