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Uruguay's Situation

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    Friday, 2 August, 2002 Uruguay hit by strikes and violence BBC Reports Uruguayans are angry over continuing economic turmoil There have been outbreaks of
    Message 1 of 1 , Aug 2, 2002
      Friday, 2 August, 2002
      Uruguay hit by strikes and violence
      BBC Reports

      Uruguayans are angry over continuing economic turmoil
      There have been outbreaks of looting in the Uruguayan capital,
      Montevideo, as workers held a general strike in protest at the
      country's worsening economic crisis.
      Witnesses said protesters threw rocks and robbed supermarkets,
      bakeries, butchers' shops and a pizzeria before police moved in.

      The violence came two days after the government ordered banks to
      close to try to stop people withdrawing savings.
      The tiny South American state ground to a halt as workers demanded
      higher wages and cash to prop up the national banking system.

      The strike was unanimously approved by the 42 unions we represent
      Juan Castillo Union leader declared to the media.

      Only health, education and some bank employees failed to walk off the
      job on Thursday morning to demonstrate against the government.
      "The strike was unanimously approved by the 42 unions we represent,"
      said union leader Juan Castillo, a member of Uruguay's largest labor
      movement umbrella group,


      The Uruguayan Government closed the country's banks on Tuesday and
      does not plan to open them again until next week.

      "Our intention is first of all to create some breathing space," the
      country's Economy Minister, Alejandro Atchugarry, said during a
      speech on Wednesday.

      Cash machines were switched back on during Wednesday to allow people
      to collect their salaries.

      Latin fever

      Uruguay's troubles are intensifying, along with fears that the Latin
      American region faces a potential meltdown.

      On Thursday, the International Monetary Fund (IMF) was discussing
      fresh loans with Uruguay, as well as Brazil and Argentina.
      Atchugarry is trying to unite his country

      Brazil is being buffeted by fears that it could default on $250bn
      public debt if a left-winger wins the October presidential election.
      "I continue to favor support for Brazil and other nations that take
      appropriate policy steps to build sound, sustainable and growing
      economies," said US Treasury Secretary O'Neill, who is keen to show
      his support for the Latin American countries after a gaffe last

      A spokesman for the IMF said the Fund was considering new loans or
      accelerating payments on existing loans agreements for Uruguay.
      Local newspapers in Uruguay have been reporting that the country was
      to receive a $1.5bn from the IMF next week, thanks to pressure from
      the US Treasury.

      However, the spokesman said that press reports of "imminent" aid to
      Uruguay were "over-enthusiastic", but added: "There is a sense of
      urgency that things need to be done."
      Uruguay has already received a $3bn support package from the IMF
      earlier this year.

      Bank breather

      The closure of the banks risks inciting further panic in the country,
      as people remain unable to access their savings.

      Withdrawals have already stripped hundreds of millions of dollars
      from the country's financial system.

      The government is in the midst of debating further cuts in public
      spending, while also trying to boost morale in the country
      "And as Uruguayan citizens, we are also well aware that our country
      is united, that our people are willing and have been willing to work
      to solve the problems," said Mr Atchugarry.

      He added that the problems were "to a large extent the result of
      difficulties that our region has been experiencing".


      During the past few months deep recession in Argentina has knocked
      confidence in the economies of Uruguay and Brazil.
      Currencies in the region have taken a nose-dive as investors are
      increasingly concerned that Argentina's problems have been exported
      to neighboring countries.

      Brazil's battered currency, the real, rebounded from record lows on
      Thursday on hopes of an new IMF loan.

      It strengthened by 6% to 3.270 against the US dollar, while
      Argentina's peso rebounded slightly from Wednesday's trade.
      The Uruguayan peso has recovered slightly to 28 to the dollar, since
      losing 14% of its value on Tuesday after the banks were closed.

      But it has lost about half its value against the dollar since the
      lifting of foreign exchange controls in mid-June.
      Three years of recession in the country have left one in four
      Uruguayans unable to meet basic food needs or pay home bills.

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