Argentines pray for end to debt

By Daniel Schweimler BBC news correspondent

Argentines bashed pots and pans in protest against the government

The board of the International Monetary Fund is meeting in Dubai to consider a three-year loan agreement with Argentina.

Creditors and the Argentine Government are, meanwhile, preparing for talks early next week on rescheduling $90 billion in defaulted government debt.

While their leaders negotiate, the people of Argentina watch closely, hoping to see some signs of an end to a crisis that has seen hundreds of businesses go bankrupt, millions of people thrown out of work and a once large middle class decimated.

The people of Argentina made plenty of noise when their economy collapsed over a period of several weeks in late 2001 and early 2002.

They took to the streets in their thousands, bashing pots and pans, to demand action from their political leaders.

Instead, President Fernando de la Rua fled the presidential palace in a helicopter and shortly afterwards the country defaulted on its foreign debt of about $140 billion - the biggest default in history.

Repercussions

The government passed emergency laws to prevent people taking cash from their own bank accounts, in order to stem the flow of money from the country.

The IMF is confident President Kirchner can deliver

Argentina devalued its currency, the peso, and ended its parity with the US dollar, a measure introduced 13 years previously in a successful battle against hyperinflation.

A degree of stability returned. But thousands of businesses went under, unemployment levels shot up and there were reports of children dying of malnutrition.

There were also repercussions on the economies of neighbouring countries and creditors still wanted to be paid.

So, first President Eduardo Duhalde and then the recently elected President Nestor Kirchner continued talks with the IMF and World Bank, despite many blaming the stringent financial conditions they had attached to their loans for causing the crisis in the first place.

However, the IMF's managing director, Horst Koehler, thinks it is worth helping Argentina once again.

"I have no guarantee. This is a programme with risk but I do think that my recommendation to the board is justified," he says.

"The programme addresses the major areas for such reforms in the next two to three years.

"I have the feeling that President Kirchner is able to unite the country and to deliver on the reform agenda in this programme."

Brink of ruin

The Argentine economy is unlikely to recover without international help.

The devalued peso has helped boost its export market and brought foreign tourists and investors flooding into what is now a much cheaper country.

The economy is growing again, albeit slowly, and President Kirchner has overseen a return to a delicate political stability.

But millions of Argentines are still finding it difficult to make ends meet.

Tens of thousands have emigrated and many of those who remain have lost all faith in their political and economic leaders, who led this once wealthy land to the brink of complete ruin.