INTRODUCTION: Workers in Argentina saw the purchasing power of their wages fall sharply this month following the government's surprise devaluation of the peso.
GV Government House, Buenos Aires
GV EXTERIOR Economy Ministry building
CU Sign outside Sasetru factory PULL BACK TO GV factory yard
SV PAN Idle Sasetru factory
SV PAN & CU EXTERIOR Factory doors with notice saying factory is closed (2 shots)
SV EXTERIOR Two banks (2 shots)
SV People noting down exchange rates from notice board (2 shots)
SV People lining up to deposit money in bankrupted finance house
SV PULL BACK TO GV Goods being loaded on ship at port of Buenos Aires (2 shots)
SV People shopping
CU PULL BACK TO SV Price tags on imported goods in shop window (2 shots)
SV People looking in window of electrical goods store
CU PULL BACK TO SV Price tags on electrical goods
CU PULL BACK TO SV EXTERIOR Shop specialising in imported goods
SV People in busy shopping district
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Background: INTRODUCTION: Workers in Argentina saw the purchasing power of their wages fall sharply this month following the government's surprise devaluation of the peso. It fell by 10 percent against the dollar in its biggest single exchange fluctuation for more than five years. The decision to devalue the peso was taken by President Jorge Videla who retires from office next month (March). He'll be succeeded by General Roberto Viola who's expected to continue with the same monetary policies. Argentina's military government has been trying to stabilise domestic prices. To achieve this it's been holding down the pace of devaluation and opening up the economy to competition from imported goods.
SYNOPSIS: But the Argentine government's financial strategy appears to be flagging. The economic crisis has resulted in a large number of shut-downs in banking and industry. The latest victim is the giant industrial group "Sasetru", the country's biggest single concern. It's closing down after a judge ordered it into bankruptcy. Thousands of people will find themselves unemployed by the closing of Sasetru's vast grain export, food processing, shipping, banking and insurance operations.
The closing of Sasetru was another blow to Argentina's banking system. Bankruptcy has forced the closure of a number of major banks in the last twelve months. Sasetru owes one point two billion dollars to the banks, and it's one of 32 important companies which have closed since January, last year. Argentine industry, one highly protected, is reported to be suffering from the free market policies of Economy Minister Jose Martinez de Hoz.
Many local firms are having trouble competing with lower priced imported goods.
The minister has been reducing or doing away with export subsidies, import tariffs and low interest rates. Annual inflation has been reduced from triple to double figures, while real interest rates have risen sharply. This has made it difficult for banks and for companies to repay their loans.
The country's average income has dropped considerably since the military took power from President Isabel Peron in 1976. Although unemployment is not high, many Argentine families rely on more than one wage earner to survive. The overvalued peso has meant that most items in the shops are very expensive by any standards.
Opposition to the regime's economic policies is strongest among the middle and poor classes. They are the hardest hit by the result of Argentina's four year old monetarist experiment, a crippling increase in the cost of living.