Argentina's senate boosts president

The president wins executive power

Argentina's Senate has approved the transfer of special executive powers to President Fernando de la Rua to help him push through urgent economic reforms.

The country's senators voted 50-4 to grant the powers after 12 hours of debate.

The seal of Senate approval follows an earlier vote on Monday by the lower House, which had previously modified some of the powers requested by the president.

Mr de la Rua and his new finance minister, Domingo Cavallo, have argued that Argentina's Congress needed to grant the president executive powers to pull the country out of its 33-month recession.

Modifications

The reforms that will be enacted include tax changes, deregulation of the financial markets and overhauling the country's bureaucracy.

Everyone has contributed to this. I am very satisfied with what has happened

Mario Losada
Senate president

The lower House modified the powers to prevent Mr de la Rua from having absolute power to cut civil servant pay, reform labour laws or tamper with the pension system.

Senators welcomed the final passage of the new legislation granting special powers as a last-ditch attempt to mend the economy.

"Everyone has contributed to this. I am very satisfied with what has happened and am pleased with all the political parties," said Senate president Mario Losada.

'Pulverising tax evasion'

The sweeping executive powers, which will last for a year, will help Mr Cavallo tackle Argentina's 15% unemployment, endemic tax evasion and $120bn in public debt.

Mr Cavallo told bankers and businessman earlier this week: "(My plan) will pulverise tax evasion and contraband."

Mr Cavallo takes the oath to become the country's third financial chief since January

He has called Argentina's troubles a "depression of state of mind".

Mr Cavallo also plans to cut Argentine production costs by 20% and proposes streamlining labour laws, which he says "inhibit job creation".

Fiscal changes include a tax on financial transactions and tariffs designed to encourage companies to invest in their businesses.

What the country needs

"We have given these tools to the president and we hope he will use them for the economic growth that the country needs," said Jose Luis Gioja, a senator with the opposition Peronist party.

State workers, however, are less receptive to Mr Cavallo's plans, fearing large-scale job cuts.

"We are totally opposed to a restructuring of the labour laws and the privatisation of state business that inevitably will mean the firing of workers," said the leader of a state workers' union, Juan Michelli.

In October, Argentina suffered a financial crisis that lasted for months after investors became concerned that the country would not meet its debt obligations.

Mr Cavallo replaces Ricardo Lopez Murphy as third minister responsible for the economy in as many months.