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Monday, 4 February, 2002, 00:54 GMT
Argentina unveils crisis package
Street protest in Argentina
It is unclear if the measures will quell popular anger
Argentina's economy minister has announced a package of emergency measures he hopes will pull the country out of its worst crisis in decades.

In a nationwide address, Jorge Remes Lenicov said the government planned to fully float the national currency, the peso, and draw a line under a ten-year experiment that saw it pegged to the US dollar.

Key measures
Peso to become fully convertible
Some bank restrictions lifted
Dollar loans switched to pesos at 1:1
Dollar borrowings switched to pesos as 1:1.4

He said all debts and savings taken out in dollars would be converted into pesos, and also announced a partial relaxation of unpopular restrictions on bank accounts imposed last December to stop a run on reserves.

Mr Remes Lenicov said the priorities were to end a four-year-long recession and tackle unemployment, now at 18%.

But he warned that: "There are no magic formulas, no immediate solutions, it is a process".

The announcement had been delayed by a day after the Argentine Supreme Court ruled on Friday that the banking restrictions were unconstitutional, throwing the government's rescue plan into doubt.

Budget due

As part of the package, Mr Remes Lenicov said this year's budget would be presented to Congress on Tuesday. He said it would dominated by austerity and only social spending would be spared, though he expected the budget to remain in deficit.

Jorge Remes Lenicov
Mr Remes Lenicov warned of 'no magic formulas'

Mr Remes Lenicov also announced the closure of currency exchange markets until Wednesday.

The government hopes the package of measures will help win up to $20bn in additional aid from the International Monetary Fund.

The peso has already been partially floated on the foreign exchange market, where it currently trades around two pesos to the dollar.

Mr Remes Lenicov said the currency would be fully floated when conditions were "ripe".

Under previous governments' convertibility rules, the peso was set at parity with the dollar, which encouraged many people to borrow and lend in the US currency.

Loans taken out in dollars will be converted into pesos at a rate of one to one, implying big losses for Argentina's mainly foreign-owned banks.

Savings that were deposited in dollars will be converted into pesos at 1 to 1.40, he said.

Argentine protester
The banking restrictions angered many people

The BBC's South America correspondent Peter Greste says the rules mean both banks and depositors will lose out, but most will survive.

Access to savings

The controversial restrictions on bank accounts - imposed after worried investors withdrew $2bn in one day - were among some of the most unpopular policies of the previous government of President Fernando de la Rua.

The curbs, which limited withdrawals to 1,500 pesos ($800) a month from salary accounts, prompted violent street protests and left some people without enough cash to buy basic provisions.

Under the new measures, Argentine's will have full access to their pay checks as soon as they reach their salary accounts.

However, restrictions remain in place on other accounts.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Sue Haley
"Thousands had queued at banks"
The BBC's Peter Greste
"Some people will lose quite a lot of money"
See also:

02 Feb 02 | Americas
Argentina 'on brink of anarchy'
30 Jan 02 | Business
IMF tells Argentina to cut spending
02 Feb 02 | Media reports
Press attacks supreme court decision
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