The expansion has been fueled by a 70 percent devaluation of the Argentine peso in 2002 that substantially boosted the country’s exports, especially in agriculture. The devaluation affected working people most adversely, resulting in slashing of real wages and a sharp rise in prices of basic necessities.

Buenos Aires also announced it will pay up to $200 million in service fees to six banks to restructure the $88 billion debt on which it defaulted in January 2002, according to a February 21 Reuters dispatch. So far the government has refused to discuss demands for payment of an additional $18 billion in interest accrued since its default.

The government of Nestor Kirchner has offered to pay 25 cents on the dollar to banks in Milan, Tokyo, Frankfurt, and New York for this debt. Argentina’s creditors have demanded payment of no less than 65 percent.

The Kirchner administration has said it cannot pay more on the debt “without endangering a faster-than-expected recovery from deep economic crisis and inflicting more pain on the 50 percent of the population living in poverty, on just a couple of dollars a day,” Reuters reported.  
 
 
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