New economics czar in Argentina seeks to ease giddy inflation
Argentina last year achieved a record it is not proud of: It had the world's highest inflation.Skip to next paragraph
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Inflation, indeed, has become so ingrained in the system that Argentines have developed a knack of living with it.
But Roberto Alemann, the recently installed economic minister, is hoping to take the crackle out of the inflation fire. Figures published recently by the International Monetary Fund show that last year Argentina topped Israel's 109.9 percent inflation with its 130.3 percent figure. Unofficial estimates put Argentina's inflation rate even higher.
Some believe Mr. Alemann's orthodox monetarist logic may be misplaced in a country as money-wild as Argentina. Alemann has put a priority on reducing inflation. He hopes to bring the rate well down into double figures by the end of the year by freezing salary increases and increasing the efficiency of the state sector.
Inflation in Argentina may be less tangible than Alemann thinks. Argentines of all classes are learning to live with it, and they share a deep mistrust of government policy to cure it.
Speaking of Alemann's recently removed predecessor, a young Argentine journalist charged: ''Every time he promised one thing he did precisely the opposite.''
The national airlines, Aerolineas Argentinas, recently carried a movie on its transatlantic flights of poignant relevance to its passengers. It was called ''How to beat the high cost of living'' and had a blurb that promised miracles ''for everyone who ever wanted to do to the system what the system's been doing to them.''
To deal with inflation, many Argentines have developed the art of speculation. Argentines speculate in dollars the way Americans guzzle soft drinks. That explains why in part of central Buenos Aires there are probably more ''bureaus de change'' than there are cafeterias. Periodically, rumors of imminent exchange controls, devaluations, and general lack of confidence in the government provoke major rushes to sell pesos. The city's exchange houses stay open about three hours longer than the banks, so they usually take in more clients.
One exchange rush took place just before the new year, the second in four months. The value of the Argentine currency against the dollar was cut by more than 27 percent in about three days.
Officially, a measure of stability has been restored to the local foreign exchange market with the peso devaluing at a steady rhythm in line with government policy, rather than in leaps and bounds. There is, however, a rampant black market. ''Tell me when you want to change your next batch of dollars and I'll ring up my man,'' a local teacher said.
Her ''man'' was a foreign exchange dealer who opened up a second work shift in the basement of his office after hours.
The peso now is about 11,000 to the dollar. Most tenants paying in cash have to deliver rent in a suitcase. ''You could use the peso to paper walls if it didn't look so horrible,'' remarked a local diplomat.
Argentina's opposition parties remain unconvinced by President Leopoldo F. Galtieri's gradualist approach to democracy. They believe a subtle attempt is being made to isolate the traditional political parties and replace them with a semi-official government party based on the present military regime.
A statement issued by a grouping of the five major parties, including the Peronists, said recently: ''They (the people) demand respect and only receive aggression; the people demand justice and get indifference; they demand freedom and have to put up with threats.''
Public criticism of the regime is being stirred by the unpopular economic measures being applied by the Economics Ministry. Roberto Alemann took his ministry post at the beginning of the year -- when the military was already facing considerable criticism for mismanagment of the economy. Last year, besides the inflation problem, Argentina's foreign debt reached $32 billion and the country's gross domestic product plummeted 6 percent.
Other efforts by the government to control the situation have included closer inspection of exchange houses, a primitive kind of rent law, and generally reducing overall consumption by making people earn less.
Some economists are skeptical about the firmness of the measures and their chances of success, believing inflation to be an endemic part of the country's system. ''There are so many people, from the top to the bottom, involved in some kind of speculation that the economy probably can't do without it,'' an economist said. Recently a local newspaper carried a report that a huge contraband cargo of soy beans had slipped unchallenged in broad daylight from Argentina into Paraguay. The official explanation was that the customs officers on duty had been sleeping.