Argentina's new populist leader was expected yesterday to unveil details of his crisis plan to help rescue the economy from meltdown after a grueling recession that sparked deadly riots last week, forcing his predecessor's resignation.
Interim President Adolfo Rodriguez Saa has already suspended
Argentina's foreign debt payments, meaning Latin America's No. 3 economy is now on a direct course to default on its US$132 billion public debt.
He has also promised to flesh out plans to print a new third currency called the "argentino" to help fund a million new jobs to tackle unemployment, which is approaching 20 percent in a country where one third of the population lives in poverty.
With the charred debris of the riots that left 27 dead last week still littering some parts of the capital, Rodriguez Saa spent Christmas Day discussing his new jobs initiative with top officials from the hitherto main opposition Peronist party.
Rodriguez Saa, who will shepherd Argentina until new elections in March, promised early on Monday to finish the details of his economic plan "in 48 to 72 hours." He met with members of his Cabinet to discuss next year's budget.
Former president Fernando de la Rua sent a dramatically austere budget for next year to Congress just days before his fall -- but the Peronists will likely rework the budget now they have suspended foreign debt payments.
"The most important thing now is that there be tangible balance in the 2002 budget," Martin Redrado, chief economist at think-tank Fundacion Capital, said.
Delivering a realistic, balanced budget is crucial to any hopes of further support from multilateral lenders, who have not officially commented since the suspension of payments kicked in.
Investors are also keenly awaiting details of the new currency, which will circulate and likely float alongside Argentine pesos and US dollars and should help inject liquidity into the moribund economy.
The argentino will replace myriad bonds and provincial bonds like the Patacon, introduced as legal tender -- and should be in circulation by early January. The decade-old one-to-one peso peg to the dollar however, will remain intact.
Many analysts have warned printing money is just a quick fix -- but words of backing for the new government continued to pour in from the international community over the weekend, from the US to Brazil, Britain to France.
British Prime Minister Tony Blair sent Rodriguez Saa a letter promising to keep "working with international financial institutions" to help Argentina.
Even Cuba, which slurred De la Rua's administration as "boot lickers" for kowtowing to the US, sent Rodriguez Saa congratulations for "investing the unbearable, burdensome costs of a colossal foreign debt ? in social programs and rebuilding the nation's economy."
Analysts say avoiding formal devaluation makes political sense as it would cause widespread bankruptcies given most Argentines earn in pesos but have dollar debts.
The new government, eager to win March elections and capture power until the scheduled end of De la Rua's mandate in 2003, wants to avoid that at any cost.
Rodriguez Saa has said he plans to start talks with Argentina's foreign creditors -- who have made it clear any move to convert their dollar-denominated bonds into any other currency would be unacceptable -- over the restructuring of the debt "shortly."
He must also convince a jittery public to stop draining their cash from the creaking banking system for fear their savings will soon be worthless.
The central bank extended a banking and foreign exchange holiday decreed last Friday until yesterday, which coupled with continued limits on cash bank withdrawals should help stem the deposit outflow for now.
The transition government of Peronists -- who ran the South American country of 36 million people from 1989-99 -- aims to jump-start an economy that has not grown for four years by diverting money previously meant to service the public debt pile to social and work programs.
So far the government has announced 10,000 new jobs for the military, as well as 20,000 new jobs for the country's wealthiest but most heavily indebted province, Buenos Aires.
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