Uruguayans angry over bank closures

Unions belonging to Uruguay's largest trade union federation took strike 
action last week over the economic crisis which saw the closure of the 
country's banks.

"The strike was unanimously approved by the 42 unions we represent", said 
union leader Juan Castillo.

"The strike's aim is to demand real solutions to the financial crisis", 
said Eduardo Pereira, a leader of a group of workers who held a mid-day 
rally in Montevideo.

Labour leaders said they wanted a national dialogue with the government and 
made their point by shutting down all but essential public transport for 
the four hours of the strike.

The latest crisis was sparked by weeks of massive capital flight from the 
nation's banks, as Uruguayans and Argentinians — who had placed their 
money in Uruguay when their own country's financial system started to 
wobble last year — yanked their deposits out.

The amount of capital in many Uruguayan banks has fallen dangerously low in 
recent weeks, causing fears of widespread bank collapses. In the first 
seven months of 2002, total bank deposits have fallen 40 percent.

The crisis comes as Uruguay suffers its fourth straight year of recession.

In announcing the bank closures, Uruguay's Economy Minister said the 
Government's aim was to "create some breathing space".

Uruguay's troubles are similar to those of Argentina and Brazil as fears 
grow that the Latin American region faces a potential meltdown.

The International Monetary Fund (IMF) was discussing fresh loans to 
Uruguay, Brazil and Argentina last week.

Brazil is being buffeted by fears that it could default on US$250 billion 
public debt if a left-winger wins the October presidential election.

"I continue to favour support for Brazil and other nations that take 
appropriate policy steps to build sound, sustainable and growing 
economies", said US Treasury Secretary O'Neill.

A spokesman for the IMF 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 received a $3bn support package from 
the IMF earlier this year.

Bank withdrawals have already stripped hundreds of millions of dollars from 
the country's financial system. The Uruguayan peso has lost about half its 
value against the dollar since the lifting of foreign exchange controls in 
mid-June.

One in four Uruguayans are now unable to meet basic food needs or pay home 
bills.

"People have had the feeling we were going to become the next Argentina for 
a while now", said Leonardo Brum, a lawyer in Montevideo, Uruguay's capital 
city. His dollar-denominated mortgage payments have grown from a quarter to 
more than half of his salary since the peso was floated.