MercoPress. South Atlantic News Agency

Argentina to eliminate alternative currencies

Argentina on Thursday took a step toward fulfilling its agreement with the IMF to take out of circulation provincial-government bonds that have been used as legal tender.

The $1.5 billion plan will replace with Argentine pesos - the country's official currency - the impromptu currencies that sprang up during the nation's unprecedented fiscal crisis.

Argentina agreed to pull the bonds as part of a transitional loan agreement reached in January with the International Monetary Fund to reschedule more than $16 billion in debt.

"We set the goal of restoring the peso as Argentina's sole form of legal tender and today we are fulfilling that," Argentine President Eduardo Duhalde said during the signing ceremony with provinces.

The bonds were issued by cash-strapped provincial governments at the end of 2001 to pay for services and cover payrolls amid the nation's financial meltdown.

A dozen different provincial bonds were put into circulation and have been used for retail transactions and to pay taxes.

Cabinet chief Alfredo Atanasof said many civil servants will benefit immediately from the change, since they receive their wages in provincial bonds that are worth less than the peso in several provinces.

Provincial bonds will be redeemed at their market value, which, in some cases, has fallen to just 45 percent of their face value.

The peso has lost two-thirds of its value since being allowed to float against the dollar in January 2002, the same time the country defaulted on its $140 billion debt.