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ARGENTINA | 22-03-2020 16:02

Pandemic prompts fears for the future from crisis-weary citizens

The coronavirus outbreak has paralysed the global economy – and that could not have happened at a worse time for Argentina...

Most Argentines knew 2020 would be a tough year as the country struggles to pay off its debts But no-one could have imagined that a pandemic would also leave people locked up in their own homes.

Buenos Aires and most other cities in Argentina now resemble ghost-towns.

"Argentina has just had two difficult years and we knew (this year) was going to be very tricky, but this..." said Eduardo Cabrera, 41, who runs three businesses.

Two of the three, dealing with logistics and tourism, are "totally shut down" and only his software business is still running.

In a bid to slow the spread of the novel coronavirus, President Alberto Fernández ordered a "preventive and mandatory" isolation, effective until the end of the month.

The country of 44 million people has recorded 225 cases and four deaths at the time of writing.

"It's a blow that's going to leave a lot of those that work with us by the wayside," said Sandra, an events manager who declined to give her surname.

"You have a loss of profits and you have to pay bills, you have to pay salaries, and you have to pay rent.

"We're reprogramming weddings, but it's not easy dealing with some clients. Many brides-to-be don't want to get married in winter because they have a summer dress, others say they already have the dates engraved on the rings.

"We don't know if we'll be here in 2021."

Lowered expectations

Buenos Aires has recorded around 70 percent of Argentina's coronavirus cases. Its central neighbourhoods, usually teeming with tourists, are virtually empty.

Tourism has been a pillar of the economy in recent times, after a currency crisis made Argentina a bargain destination. Expectations in the sector were high for 2020, but the pandemic has dashed those hopes. Travel plans were cancelled and hotels and travel agencies are suffering.

"Right now we have contracts running out and we're not renewing them," said Cabrera, the businessman.

Since the first cases emerged late last year in China, the coronavirus outbreak has paralysed the global economy.

It could not have happened at a worse time for Argentina, which was already in recession, struggling with its own economic meltdown.

More than 15 million Argentines live in poverty as soaring inflation, currently over 50 percent, has decimated people's spending power.

"But it's going to get worse: GDP was expected to fall 1.6 percent, but now that calculation is close to three percent ... it all depends on how long this lasts," said political analyst Carlos Fara.

Risk of default

The health crisis could lower the value of the peso at a time when currency stability formed an essential element in the government's economic recovery programme.

Argentina risks being unable to pay the interest on its debts if the peso loses much more of its value against the US dollar.

"We have less international demand for our products. That generated a lower quantity of dollars and puts at risk the government's ability to negotiate its debt," said Fara. "If you add to that the fact Argentina could go into default, something the markets are already imagining, the panorama gets even worse."

The government had planned in mid-March to propose to its foreign private bondholders a restructuring of almost US$70 billion of its US$311 billion of public debt. But global instability has forced a postponement.

In Buenos Aires, helicopters hover overhead trailing banners telling people to stay at home.

That will deeply affect the informal sector, which accounts for close to 40 percent of Argentines, "many of whom have no income," said Fara.

Rudi Zarate works in construction and cannot afford to stop. 

"The truth is I need money and I'm going to work," said the 21-year-old.

But Fernández has been clear: "Everyone must stay at home," he said, adding that the government would be "unyielding" with those who fail to comply.

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by María Lorente, AFP

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