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Saturday, 22 December, 2001, 16:34 GMT
Tough test for new Argentine leader
Money woes leave Argentina short of Christmas cheer
Argentina's Congress is preparing to approve a interim president, as speculation mounts about how the new government will confront the country's economic crisis.
Adolfo Rodriguez Saa, a provincial governor from the dominant Peronist party, is set to replace Fernando de la Rua, who resigned on Thursday after two days of rioting prompted by economic hardship that left up to 25 people dead.
Some members of his party argue the money is more urgently needed to pay wages and for emergency social spending. If Argentina did announce a suspension, it would trigger the biggest debt default in history.
These are expected to include continuing an austerity programme, selling bonds to raise fresh funds, and providing food aid. Under a complicated deal agreed between Peronist party leaders, Mr Rodriguez Saa will remain in office until presidential elections on 3 March next year. Whoever wins that poll will serve out the two years that remain of Mr de la Rua's term in office, after which there will be further elections.
Mr Rodriguez Saa has already pledged to keep the national currency, the peso, pegged to the US dollar, even though many economists think that policy is doomed because it has made Argentine products very expensive. Two judges have meanwhile barred Mr de la Rua from leaving the country, as an investigation is launched into police conduct in dealing with the recent disorder. In the capital Buenos Aires, police on horseback charged demonstrators and looters, pummelling them with water cannon and volleys of tear gas - often firing directly at protesters. More than 2,000 people were arrested nationwide, though almost all the reported deaths were blamed on shopkeepers shooting at looters. IMF appeal US President George W Bush has urged the country's new leader to push through an austerity programme proposed by the International Monetary Fund. But after a four-year recession, with official unemployment at 18%, there is unlikely to be much public support for IMF-approved measures.
Oscar Lamberto, interim finance minister following the resignation of Domingo Cavallo, told an Argentinian radio station that people should stay calm because the new government would not do anything to damage their wealth. Asked if restrictions on cash withdrawals from banks might be lifted, he replied: "I don't see the possibility of allowing big withdrawals, because there's not the money to pay for them." The BBC's Tom Gibb says Argentina's big problem with its currency is that many ordinary Argentines have mortgages and other debts in dollars, as do businesses and farms. But they earn money in pesos, so any devaluation would only increase the size of their dollar debts. Some Peronists have suggested converting these debts into pesos, but our correspondent says that this would be massively expensive and no one has explained how it would be funded.
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