Diplomat and trade advocate Roberto Lavagna was sworn in Saturday as Argentina's sixth economy minister in little more than a year with a promise to announce new policies for his country's crumbling economy today.
The man who swore him in, President Eduardo Duhalde, then demanded during a radio appearance that talks with the IMF must lead to a new line of credit for his country by May.
Argentina, which is struggling through a four-year recession, currency devaluation and default on its US$141 billion in debt, was cut off from more IMF credit in December. On Saturday, Duhalde warned that Argentina lacked the funds to pre-finance its exports.
PHOTO: AP
Duhalde's government finds itself caught between between demands to cut spending to get more international loans and the need to increase spending to get Argentina's economy chugging along again.
After he took his oath of office Saturday, Lavagna, the former ambassador to the EU, promised not to forget the needs of the 40 percent of Argentines who live in poverty while he tries to fulfil the budget-cutting demands of the IMF.
But Lavagna's appointment to his new post could not defuse money- related tensions in the population, which boiled over into violent clashes in several provinces between the police and unemployed workers as well as bank account holders who are frustrated over the government's tight grip on their savings.
Clashes were reported in Santa Cruz and Jujuy provinces, and in Formosa, unemployed Argentines occupied banks Friday because their government aid was not being paid out. Bank spokesmen said the money had not been transferred from the national government on time, news that prompted the demonstrators to storm several supermarkets.
The number of people living in poverty in Argentina has risen rapidly since January, when Duhalde allowed the Argentine peso to float and it lost 70 percent of its value. One of the big questions facing Lavagna as he took office Saturday was whether he would continue to let the market set the value of the peso.
Duhalde said one of Lavagna's first acts as economy minister would be a return to anchoring the peso to the US dollar, but media reports on Saturday said Lavagna wanted to let the peso float because he said its value was unlikely to fall much further.
The peso's fall has let to a substantial rise in prices, especially for basic needs, like food, which has risen virutually beyond the reach of the poor.
The peso's devaluation as well as the government's strict restrictions on how much money Argentines can withdraw from their bank accounts, which were aimed at stopping capital flight and preventing a bank system collapse, has led to unrest and nearly daily demonstration since December, when protests and food riots forced out a president.
Duhalde's government also found itself in a crisis last week after former economy minister Jorge Remes Lenicov stepped aside when he failed to win support for a plan to convert Argentines' savings into less valuable government bonds.
Government officials were discussing a similar plan over the weekend as Lavagna took office with the job of ending Argentina's worst economic crisis in its history.
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