NEW president Nestor Kirchner has stepped in to end a strike by teachers demanding payment of salary arrears that kept 160,000 children out of school for the first three months of the academic year.

Children in Entre Rios province went back to school last week after President Kirchner flew to the province and handed over $28 million (pound;17m) borrowed from the World Bank only 48 hours after taking office.

The strike began in February. When the school year started in March, pupils remained at home, with teachers refusing to heed provincial governor Sergio Montiel’s “order” to return to their classes.

Though teachers received no pay while on strike they were, paradoxically, better off staying at home. Had they gone to work they would not have been paid but they would have incurred expenses.

Many parents in Entre Rios are angry that their children have missed so much education this year - to add to an incomplete school year in 2002. The governor has promised 180 days of lessons in the remainder of 2003, something that is going to be difficult, given the number of days left in the year.

Mr Montiel was unable to break the impasse because he could not find the money to pay teachers. Tax revenues plummeted as 50 per cent of the population fell below the poverty line following the government’s defaulting on debt repayments and messy currency devaluation in 2000.

The International Monetary Fund refused to bail the government out because interim president Eduardo Duhalde rejected the agency’s demands for further austerity measures in a country where children were dying of malnutrition.

However, when the price of Argentinian goods dropped after devaluation, exports soared, providing trade surpluses running into billions of dollars, and other international agencies agreed to offer loans.

The $28m handed over by President Kirchner to get Entre Rios’ teachers back to work is part of a $500m World Bank loan. Further funds, expected next week, will be used for teachers’ back pay in six other provinces where some staff have been paid in provincial bonds rather than money.