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Business

Argentina cannot spare a dime

Friday’s strike did nothing to calm investors worried that South America’s second-largest economy may default on its $132 billion debt.

default

A man begs for money in front of a Buenos Aires bank, following a state-ordered partial freeze on assets, earlier this month

Argentineans staged a nationwide strike Friday, protesting state restrictions on cash supply that have sunk their living standards but which apparently have been necessary to stave off a run on banks.

Their country’s acute financial crisis has become a political one, as the government in Buenos Aires tries to avoid default on its $132 billion debt.

It would be the biggest default by a sovereign state in history, with the potential to severely injure neighbouring South American economies as well as European economies, especially Spain, a heavy investor in the region.

The strike may put pressure on the government, but it also further injured the economy, already suffering from nearly four years of recession.

Strikers brought factories, offices and transport to a standstill across the country, and in some areas they turned violent.

Protestors burned Pergamino city hall, in Buenos Aires province, prompting a police response that left several injured, the Associated Press reported.

Hundreds of state workers clashed with police in Neuquen, a city 640 miles from the capital, in a hail of rocks and tear gas.

Labour unions claimed that 100 percent of the country’s workers sat the day out, but the government put the figure at 59 percent, Reuters reported.

As the country’s crisis grew on the political side, the government’s own team of negotiators also started to come apart.

In an expected announcement, Argentina’s lead negotiator with the International Monetary Fund, Daniel Marx, resigned as deputy economics minister Friday.

But his surprise decision to stay on as lead negotiator was welcomed by many. Marx is viewed as a key figure, because he has advocated a policy course strictly honouring Argentina’s financial obligations.

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