Political turmoil in Argentina

Mr de la Rua is facing the biggest test of his presidency

Argentine President Fernando de la Rua has asked his entire government to resign after his economy minister stepped down sparking a political crisis.

A statement from the cabinet office said the move was to allow a reshuffle.

The president is looking for a minister with the profile necessary to enact his goals: economic recovery, growth and more employment

Ricardo Ostuni, spokesman

The request came as Mr de la Rua consulted his advisers about who should replace Jose Luis Machinea who announced he was vacating his post on Friday.

He had come under mounting criticism for his handling of the economy which has been in severe recession for more than two years.

In early January, international lenders unveiled a bail-out package worth almost $40bn, but it has so far failed to restore growth.

Unemployment is currently running at 15%.

Contenders

The president is reported to have spent the last two days huddled with top aides trying to find a way out of the crisis.

Mr Machinea: Under fire

His spokesman said on Saturday that Mr Machinea's successor would need to be someone capable of "kick-starting the economy, boosting growth and winning back jobs".

An appointment is expected to be announced on Sunday.

Reports say the post has been offered to Defence Minister Ricardo Lopez Murphy, a market favourite known for advocating careful government spending.

He has said nothing but has cut short a trip out of the country.

Another possible contender is thought to be the president's chief of staff, Chrystian Colombo.

Investors

Mr de la Rua's only other reshuffle of his 15-month presidency was last October when Vice-President Carlos Alvarez resigned, revealing cracks in the ruling coalition.

Analysts say the current shake-up comes at a key time for Argentina, which, because of its large foreign debt, is sensitive to investor sentiment abroad.

Investors have become increasingly sceptical of the government's ability to revive the economy.

Their mood has not been helped by a money-laundering scandal involving the head of the Central Bank.

Two other factors undermining investor confidence are the uncertain outlook of the US economy, and concerns that Argentina could be vulnerable to fallout from Turkey's financial crisis.