Sun, Apr 28, 2002 page11

• Bank holiday hits Argentine businesses

  ECONOMY The South American country's financial institutions have shut their doors and citizens are now running out of the cash they need to buy necessities

  • NY TIMES NEWS SERVICE
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  It was only the third day of the indefinite bank holiday decreed by the Argentine government, but by Wednesday morning, Gabino Jerez was already down to his last US$100 and wondering what to do next.

  The banks were shut, the cash machines were empty, his friends and neighbors had no money to loan him, and now he could not even use a credit card to buy gasoline.

  

  Diego Gimenez waits for customers in his bakery shop in downtown Buenos Aires. Argentina has been crippled for months by the worst economic crisis in its history.

  PHOTO: NY TIMES

  "Argentina has been stopped dead in its tracks, and me with it," complained Jerez, a 59-year-old taxi driver, as he waited forlornly for a fare at a street corner here. "We've lived through a lot of crises in this country, but the anguish of not having cash is something we have never felt before."

  This country of 37 million people has been crippled for months by the worst economic crisis in its history.But last Friday afternoon, after banks and many businesses had closed for the weekend, the Argentine economy entered the financial equivalent of the Twilight Zone.

  To stop an accelerating flow of money out of bank accounts, President Eduardo Duhalde ordered that all bank transactions simply be halted until further notice.

  Since business resumed on Monday, an eerie stillness has prevailed across Argentina, with shops empty as consumers tried to limit their expenditures to the bare necessities.

  Workers cannot cash their paychecks. Department stores, newsstands, flower vendors, restaurants, taxicab drivers, and others who deal in what are now seen as frivolous luxuries have seen their sales plummet to almost nothing. Even lottery vendors have been hit.Of course, the hardest hit by the government's measureare ordinary working families on fixed incomes.

  "Yesterday we had only half of the business we had last week, and today we had only half the business that we had yesterday," lamented Graciela Montalban, a waitress at a downtown restaurant. "The tips are really skimpy, so if this keeps up, we might as well all stay at home. That way I would at least save the subway fare."

  Nelida Vaqueta de Espriel, a 63-year-old retiree with a US$50-a-month pension, said she and her husband "are going to be sunk" if banks don't reopen by next Wednesday. That is when her husband, who is 64 and works at a chemical plant, is due to be paid.

  On Friday, Espriel had lent US$700 to a daughter who needed the money in order to pay the rent on her apartment. The daughter wasn't broke, but her bank account was at Quilmes Scotiabank, which the government had just shut down for 30 days because its Canadian headquarters had refused to send money to its Argentine branches to meet reserve requirements.

  No bread

  Left with less than US$50 in cash on hand after helping her daughter, Espriel and her husband are now trying to stretch their money as far as it can possibly go. She rattled off a long list of products she has stopped buying until the bank holiday is lifted: coffee, soft drinks, toiletries.

  "Even bread," she added bitterly. "So much for the Lord's Prayer."

  At a neighborhood bakery a few blocks away, Gonzalo Rey was also starting to feel the pinch. His purchases of flour were already down, and his suppliers were beginning to suggest that if the bank holiday is not lifted by the end of the week, they will no longer accept checks.

  "When this crazy situation started, I expected that sales of cakes and sweet rolls would fall drastically -- and they have," he said. "But bread purchases are down just as much. People who would buy eight rolls every day are only buying four, and those who bought four are only buying two."

  With cash not available in any form and checks suddenly suspect, middle class Argentines fortunate enough to have credit or debit cards had been relying on them to make purchases.

  But by Wednesday, a growing number of stores, especially those that are not part of large chains, were refusing to accept any form of payment other than cash, and in many cases, only exact change.

  "I'm getting a different set of instructions every half hour," complained Ana Murillo, a supermarket manager. "First they tell me I can accept debit and credit cards, then they tell me I can't, then they tell me again that I can, then they say credit cards only and no debit cards. It's driving me crazy."

  Shopkeepers unite

  The national shopkeepers federation, Fedecameras, acknowledged that it had issued a communique urging its members not to accept debit cards. The group blamed the banks that operate the main cards, saying that they had doubled the time in which they compensate merchants, from 10 working days to 20.

  "This is one of the few businesses in this neighborhood still accepting credit cards, but only those of longtime, regular customers," explained Gerardo Esquivel, a pharmacist. "If it's someone I don't recognize, then I'm sorry, it's cash only."

  The government decree establishing the moratorium on bank and foreign exchange operations was designed with a loophole that allows depositors to withdraw US$65 from automatic tellers every week. All but a handful of banks, though, have chosen not to replenish their cash machines when those run out of money.

  As a result, running around the city trying to get hold of cash has become a full-time occupation for some people. Wednesday morning, Aurora Melgar showed up at a branch of Banco Frances after hearing through the rumor mill that the automatic tellers there were dispensing money. But she was quickly turned away because the bank had decided to limit withdrawals to its own accountholders.

  "I've gone to more than 20 teller machines, and not one of them has a single cent," said Melgar, a 46-year-old photo shop assistant. "What kind of country is this that there is no money anywhere?"
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