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Argentina's Stopgap Cash Gets Some Funny Looks
By LARRY ROHTER
LA PLATA, Argentina, Aug. 24 It looks like money, fits into a
wallet like money, and the local government certainly hopes it will
be accepted as money.
But Ángel Díaz, a policeman here, had his doubts after being paid
this week not with pesos, but with a new emergency currency called
the "patacón," printed by the provincial government.
"Well, the electricity company accepted the patacón," he said,
"but the phone company wouldn't take them, the credit card company
also said no, and the gas company said I can only pay 30 percent of
my bill with them. The lack of confidence in this plan is obvious."
Argentina may have secured an $8 billion credit line from the
International Monetary Fund this week, but the country's finances
continue to be chaotic.
With the peso tied to the American dollar at a one-to-one rate and
the Central Bank unable to print new pesos unless it has the
dollars to back them, local governments like the one here find
themselves squeezed to the point that they cannot meet their
financial obligations. In a word, they are broke.
"There is no other money to pay salaries, and there won't be for
several months to come, because everything indicates that the
crisis is going to deepen," Carlos Ruckauf, the governor of Buenos
Aires Province, warned last week. "Those who don't want to take
patacones are within their rights to go to court, but I don't have
the pesos to pay them. Paying with patacones is a necessity, not a
whim."
The province of Buenos Aires surrounds the capital and is the most
populous of Argentina's 23 provinces, with one-third of the
country's 36 million people.
In June, the provincial government tried to head off the looming
cash crunch by floating a bond abroad, but that plan was derailed
by the financial disorder enveloping the country.
So this week the local government instead began paying its
suppliers and 180,000 employees and retirees with what is formally
called a "treasury letter in cancellation of obligations," a bond
redeemable at 7 percent interest next year.
Issued in denominations from one to 100 and officially valued at
par with the dollar, the scrip was quickly renamed with a slang
term, meaning something like wampum, used by a character in a comic
book popular with generations of Argentines.
Some businesses here, like McDonald's, have cautiously embraced
the new currency. On Wednesday, the chain put up signs announcing
"I believe in my country: I accept patacones" at its restaurants
here and began offering a special "Patacombo," consisting of two
cheeseburgers, medium fries and soft drink, for five patacones
but only if the customer has exact change.
"We can't give change back in pesos, dollars or patacones," said
Luis Sáenz, manager of a downtown branch. The Patacombo also costs
a dollar more than a Big Mac combo, which some skeptics have cited
as an example of local merchants hedging their bets by discounting
the new currency.
In general, businesses that sell basic goods feel they are forced
to accept the patacón, despite their misgivings. "If our customers
are only going to have patacones, then we are going to have to take
them if we intend to stay in business," said Hugo Ríos, a
supermarket manager.
But high-end shops and boutiques, like those selling electronic
goods and clothes, seem to have a different attitude. "I'm not
going to accept paper that is of no use to me," scoffed Diana
Lucki, owner of the Sonidos record store here.
Diego Lozano, one of Ms. Lucki's suppliers, complained that the
scrip cannot be negotiated in Buenos Aires, an hour's drive from
here, and is not yet being accepted by any bank other than the
province's. As he sees it, the patacón is a depressing symbol of
the government's desperation and Argentina's decline.
"We used to laugh at the Paraguayans with their guaranís and the
Peruvians with their soles," he said. "But what is a patacón? It
doesn't exist except in a comic strip. That we Argentines, with our
arrogance, should be obligated to accept this ridiculous currency
is ironic, a practical joke. No, it's worse than that: it's
disgraceful."
Resistance has been even more pronounced among the people who are
to be paid in patacones. On Thursday, thousands of teachers and
court and hospital workers demonstrated outside the provincial
governor's palace,
