100-peso bills

[from Latin American Herald Tribune, 11 January 2011]

Argentina Hit by Peso Shortage

A shortage of peso notes in Argentina has the government scrambling to cover the scarcity -- including an emergency order for 5 billion pesos being printed by Brazil.

BUENOS AIRES – While the order for 5 billion pesos worth of currency being printed in neighboring Brazil was expected to be completed this week, citizens and opposition politicians continued criticizing the scarcity of paper money in Argentina.

The Argentine central bank set up a special operation to distribute 100-peso bills on a priority basis to banks in the country’s most-populous provinces: Buenos Aires, Cordoba and Santa Fe.

The measure is a response to growing protests over the last few weeks in the main cities about the lack of 100-peso notes, the highest denomination.

Central bank spokespeople said Monday that the delivery of 5 billion pesos ($1.25 billion) in 100-peso bills from Brazil will be completed this week, the second such shipment since the beginning of last month.

Economists and opposition politicians said it was a lack of foresight on the part of President Cristina Fernandez’s administration that caused the currency shortage, which also complicated the payment of public-sector pensions and salaries.

Hernan Lacunza, ex-general manager of the central bank, told the press that demand for paper money always grows by 15 percent at this time of year, due to summer vacations, Christmas festivities and the payment of Christmas bonuses.

The scarcity responds to “a political decision not to react in time, it wasn’t particularly a technical problem,” he said.

Opposition lawmaker Francisco de Narvaez said Monday that the lack of cash resulted from “a government maneuver to make people consume less” and thus slow inflation.

Private economists estimate that inflation was running at 30 percent in Argentina in 2010.

Argentine authorities have given no further explanation about why the government currency office was not capable of supplying the need or why the printing of 100-peso bills had to be outsourced to Brazil.