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Tuesday, 25 December, 2001, 10:47 GMT
Argentine jobs programme begins
Beggars in Buenos Aires underground
Economic problems have caused widespread misery
Argentina's new government has unveiled the first stage of an ambitious job creation programme which interim president Adolfo Rodriguez Saa hopes will improve the lot of the country's poor.

Up to 100,000 jobs are being created in the first phase, with most of the posts being set up in the armed forces and public services like cleaning and forestry management.

Argentina's economic woes
Public foreign debts of $132bn
Unemployment at 18%
Economy in recession for four years
Savers only allowed to withdraw $250 a month in cash
2,000 people drop below poverty line each day
Pensions to 1.4m retirees delayed

Three provinces have signed up to the plan so far, and the most populous province of Buenos Aires is expected to follow suit soon.

But with more than two million people out of work, correspondents say the government's programme will have mainly symbolic effect.

The jobs programme was one of several emergency measures announced by Mr Rodriguez Saa after he took office on Sunday, replacing former president Fernando de la Rua, who resigned after rioting and looting triggered by economic hardship left at least 25 dead.

Mr Rodriguez Saa also announced that Argentina would suspend payments on its $132bn foreign debt - the biggest default in history.

The move was formally confirmed on Monday by Rodolfo Frigeri, newly appointed as secretary of treasury, finance and public revenues.

The Republic has taken this decision because an enduring economic recession, coupled with a lack of access to the international capital markets, have impaired public finances and brought hardship on the Argentine population

Government statement
The government has said it will pay the created jobs' salaries with newly issued bonds. These will effectively become a third currency, the argentino, and circulate alongside the peso and US dollar.

The new bonds will allow funds to be channelled into social programmes and calm the anger many Argentines feel about their economic plight.

The BBC's Tom Gibb says the policy is an alternative to devaluing the peso, which would be extremely unpopular because many Argentines' debts are dollar denominated and would become much more expensive to pay off if the peso's value fell.

Talks with creditors

The government also said it plans to start talks with its foreign creditors over the restructuring of its $132bn debt "shortly."

Rioting in Buenos Aires
At least 25 people died in the rioting

It is preparing to send a high-level team to Washington to meet officials from the International Monetary Fund (IMF) and the administration of US President George W Bush, sources told the BBC.

While many details of proposed economic policy have yet to be unveiled, the government has promised to flesh out its ideas by Thursday.

"In 48-72 hours we will finish the economic programme details and we will give a news conference," said an adviser to Mr Frigeri.

No devaluation

Economists say that Mr Rodriguez Saa's real challenge is to lead Argentina out of its four year recession.

Adolfo Rodriguez Saa
Mr Rodriguez Saa says his priority will be the people

The interim president said he would not devalue the national currency, the peso, nor end its peg to the US dollar - seen by financial analysts as alternative ways to deal with Argentina's enormous economic problems.

The new leader will hold office until March, when national presidential elections will be held.

The BBC's Tom Gibb
"These are ambitious promises"
Seasoned banker Roger Nightingale
"I think it is impossible to avoid it"
See also:

23 Dec 01 | Americas
Argentina to halt debt payments
21 Dec 01 | Business
Bush backs IMF austerity measures
21 Dec 01 | Business
Argentines wait for new policy
13 Dec 01 | Americas
Argentina delays pension payments
22 Dec 01 | Americas
Viewpoint: There is no future here
23 Dec 01 | Business
Argentina default impact limited
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