Argentina may follow IMF outline

Strengthened a crucial expression of support from Washington, Argentine President Eduardo Duhalde outlined an economic plan yesterday that reflects IMF calls for austerity and discipline.

The policies largely reflect recommendations made by the IMF ahead of negotiations on a major financial aid package Duhalde hopes will help solve Argentina's crippling economic crisis.

Duhalde a strong expression of support from Bush, and in turn stressed US assistance would be crucial.

The statements contrasted strongly with the perceived coolness that marked bilateral relations in the first days after Duhalde took office on Jan. 1 following the collapse of two governments last week.

Foreign Minister Jorge Remes Lenicov was due to travel to Washington later in the month to present what Duhalde said would be a sustainable economic plan.

Duhalde his government would maintain strict monetary and fiscal discipline and adopt an austere budget, policies the IMF earlier indicated were essential if Argentina is to obtain international financial aid.

"The budget we are presenting is a truly austere budget," Duhalde said in an interview with Argentine news agencies.

The Pagina 12 daily said the draft 2002 budget that is to be presented to Congress in the coming days slashes spending by a whopping eight billion dollars.

Duhalde the plan does not provide for servicing of Argentina's US$141 billion debt, payment of which was suspended last month.

"If we did include it, nobody would believe us," he said.

He said the budget would set limits on the issue of currency.

"A country that can issue money in an irresponsible manner falls into hyperinflation," he said, noting this would have disastrous consequences for crisis-struck Argentina.

The president also said his government would take measures to halt rampant tax evasion.

Another element of the plan involves converting all dollar-denominated credits, debts and accounts into pesos.

The government hopes the plan will pave the way for the negotiation of between US$15 billion and US$20 billion in international financial aid.

The funds would be largely used to boost currency reserves, now at about US$14.9 billion, so the central bank can defend the peso.

The Argentine currency lost about 50 percent of its value since the government lifted its parity with the dollar earlier this month.

When it floated the currency, the government also adopted a fixed dollar rate of 1.40 pesos for certain operations, but Duhalde said Saturday the set rate eventually would be scrapped.

But the government will maintain a highly unpopular measure that bars Argentines from withdrawing more than 1,500 pesos (US$750) a month from their accounts.

Duhalde he said he was in broad agreement with Bush on economic policy.

"But the plan will need the support of the United States," he told Bush, according to a partial transcript of Friday's telephone conversation published by the Clarin daily.

Bush, in turn, said he was fully aware of the magnitude of the problem, extending US support to Argentina.

Duhalde Saturday the program would protect the interest of Argentine business leaders and workers as well as promote the country's industry.