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Argentina's new leader halts foreign debt repayments

Adolfo Rodriguez Saa, a 54-year-old provincial governor, was sworn in as Argentina's interim president yesterday, saying he will suspend the foreign debt payment as he takes over from the fallen government of Fernando de la Rua until a March election.

Moments after taking his oath in Congress, where lawmakers capped a 15-hour all-night session naming him president, Rodriguez Saa said in an inaugural address that Argentines would have priority over crippling debt payments.

"Let's take the bull by the horns. We are going to talk about the foreign debt," Rodriguez Saa said, adding, "the Argentine state will suspend the payment of the foreign debt."

He stressed that this did not mean Argentina would permanently shun its obligations, which now amount to US$132 billion. But he said that in the meantime, money saved from the payments would be diverted into job creation and social development programs.

Rodriguez Saa was appointed interim president by a vote of 169 to 138, capping the marathon debate over terms of his caretaker presidency. He is is to stay in office until a March 3 election.

De la Rua resigned Thursday, halfway through a four-year term, ousted by popular protests against his austerity measures. Two days of looting and rioting claimed 26 lives and left more than 200 injured.

The new president suggested that de la Rua's policies had punished ordinary Argentines at the expense of paying off the crushing debt to international banks and financial agencies.

"They gave priority to the payment of ... the foreign debt over the payment of the debt to its own people," Rodriguez Saa said, eliciting shouts from the crowd of "Argentina! Argentina!"

He suggested money that would have gone to debt repayment would now be channeled into social assistance for the poor and into the creation of jobs. The jobless rate is at 18.3 percent, a near record, with 40 percent of the 36 million population at or near the poverty line.

He said he would not tolerate a devaluation or accept the US dollar as Argentina's legal currency. But he said he would introduce a third coinage, still without name, to "inject liquidity" to get money into the hands of ordinary Argentines.

The move to create a parallel currency is essentially a license to print extra money. While he defended Argentina's one-to-one peg between the peso and the US dollar, his plan to print an extra currency appeared to signal a radical departure from a decade-old currency regime.
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