LA PLATA, Argentina — It looks like money, fits into a wallet like money, and the local government certainly hopes it will be accepted as money.
But Angel Diaz, a policeman here, had his doubts after being paid this week not with pesos, but with a new emergency currency printed by the provincial government called the "patacon."
"Well, the electricity company accepted the patacon," he said, "but the phone company wouldn't take them, the credit card company also said no, and the gas company said I can only pay 30 percent of my bill with them. The lack of confidence in this plan is obvious."
Argentina may have secured an $8 billion credit line from the International Monetary Fund last week, but the country's finances continue to be chaotic.
With the peso tied to the American dollar at a 1-to-1 rate and the Central Bank unable to print new pesos unless it has the dollars to back them, local governments like the one here find themselves squeezed to the point that they cannot meet their financial obligations. In a word, they are broke.
"There is no other money to pay salaries, and there won't be for several months to come, because everything indicates that the crisis is going to deepen," Carlos Ruckauf, the governor of Buenos Aires Province, warned last week. "Those who don't want to take patacones are within their rights to go to court, but I don't have the pesos to pay them. Paying with patacones is a necessity, not a whim."
In June, the provincial government of Buenos Aires tried to head off the looming cash crunch by floating a bond abroad, but that plan was derailed by the financial disorder enveloping the country.
So last week the local government instead began paying its suppliers and 180,000 employees and retirees with what is formally called a "treasury letter in cancellation of obligations," a bond redeemable at 7 percent interest next year. In general, businesses that sell basic goods feel they are forced to accept the patacon, despite their misgivings. "If our customers are only going to have patacones, then we are going to have to take them if we intend to stay in business," said Hugo Rios, a supermarket manager.
But high-end shops and boutiques seem to have a different attitude. "I'm not going to accept paper that is of no use to me," scoffed Diana Lucki, owner of the Sonidos record store here.
Resistance has been even more pronounced among the people who are to be paid in patacones. On Thursday, thousands of teachers and court and hospital workers protested outside the provincial governor's palace, chanting "Give me pesos, give me, give me pesos."
"If someone wants to pay you with a photocopy of a dollar or a peso, would you accept it?" asked Rolando Gonzalez, a sixth-grade teacher who was one of the protesters. "Of course not. The patacon isn't legal tender either, so we don't know if it has any value or not."