Argentina forms unity government

The president will ask Congress for special emergency powers

Argentine President Fernando de la Rua has announced the formation of a national unity government to try to end a political and financial crisis.

In a much-awaited televised address, President de la Rua said he would be asking Congress to grant it special emergency powers, adding that details on the new government would be announced shortly.

My mission as president is to create an alternative political [system]

President Fernando de la Rua

The national unity government will include former Economy Minister Domingo Cavallo, who is credited with saving Argentina from hyper-inflation a decade ago by pegging the currency to the US dollar.

The political crisis in Argentina began last week when the current economy minister unveiled a major austerity package, which triggered a wave of resignations of left-wing government ministers.

"I have called on all to form a national unity agreement. My mission as president is to create an alternative political [system]" Fernando de la Rua said during his televised address.

And he added that he had had "responsible" and "patriotic" responses from across the political spectrum.

Resignations

Three cabinet ministers resigned on Friday in protest at the austerity programme that aims to combat the country's recession.

We cannot stay in the government a second longer

Frepaso leader Anibal Ibarra

They include the powerful Interior Minister, Frederico Storani, and other members of the left-wing Frepaso group, which is the junior partner in Argentina's ruling coalition.

Mr Storani stepped down shortly before Economy Minister Ricardo Lopez Murphy announced nearly $8bn of spending cuts to be implemented over the next three years.

"We cannot stay in the government a second longer," Anibal Ibarra, the mayor of Buenos Aires and a leader of Frepaso, said.

It is the second cabinet crisis in less than a month for President Fernando de la Rua, whose administration has so far failed to bring about a recovery from the long slump.

Recession

Two other cabinet ministers and a presidential aide resigned on news of the adoption of the programme, which analysts say will hit the country's working class because of its deep cuts in social spending.

Opponents say the measures will hit the poor

The measures follow a 33-month recession that shows no signs of easing, with unemployment near 15% and the country saddled with a ballooning deficit.

Argentina is an enormous borrower of foreign money - the largest in Latin America.

The country's total foreign debt is $120bn, close to 50% of the country's GDP.

In October, investors' concerns that the country would have trouble making its dept payments sparked a financial crisis that lasted for months.