Argentina officially defaults

President Duhalde welcomes Foreign Minister Ruckauf

Argentina has at last defaulted on its $141bn public debt after missing a $28m payment on a bond.

"We are now in default. The bond payment was not made," a government source told Reuters news agency.

The official default, which followed last month's suspension of payments, came ahead of an anticipated 30-40% devaluation of the peso, which has been tied for a decade to the US dollar.

The devaluation is expected to be part of an economic plan, due to be outlined on Friday by the new president, Eduardo Duhalde, Argentina's fifth leader in two weeks.

New cabinet

Mr Duhalde faces the daunting task of pulling Argentina's debt-laden economy out of a four year recession that culminated in widespread riots and the death of 27 people.

The economic bill "may arrive" in Congress on Friday, said incoming treasury secretary Oscar Lamberto.

"The idea would be to work [on Friday] and Saturday, so that the law can be approved before markets open on Monday," he said.

By then, Mr Duhalde's new cabinet, appointed on Thursday, should be hard at work.

Economist Jorge Remes Lenicov - formerly Mr Duhalde's provincial economy minister - has become the new economy minister while veteran politician Carlos Ruckauf is the new foreign minister.

Shares soar

Ahead of the official default and the anticipated devaluation, Argentine citizens continued to invest their cash in shares to protect themselves against a fall in their currency's purchasing power.

My commitment is to do away with an exhausted economic model

President Eduardo Duhalde

The benchmark ValMer index rose almost 4% during the first hour of trading, building further on the near 10% rise on Wednesday.

Demand for other assets, such as property and jewellery, has also risen sharply due to the devaluation speculation

Falling peso?

A central bank rule forcing banks to accept the peso at a rate of one-to-one to the dollar will end at 2300 GMT on Thursday.

The Duhalde adviser said the peso might be moved to 1.3 or 1.4 pesos to the dollar.

The devalued peso would then be pegged to a basket of currencies including the Brazilian real, the Japanese yen and the euro.

Among Mr Duhalde's promises is the protection of billions of dollars locked in bank accounts since strict limits were put on cash withdrawals in the run-up to and during Christmas.

But many people were this week still lining up outside the banks to withdraw their cash.

Leap in the dark

Martin Redrado, chief economist at the Buenos Aires think-tank Fundacion Capital, said Mr Duhalde's economic plan was "a leap into the unknown".

It was likely to entail a more protectionist approach than his predecessors, Mr Redrado added.

Argentina in crisis

Early December, IMF refuses to disburse $1.3bn aid

20 December: President de la Rua resigns after riots

23 December: Adolfo Rodriguez Saa sworn in

30 December: Mr Rodriguez Saa resigns

1 January: Eduardo Duhalde elected president

2 January: News that Argentina's debts have risen to $141bn emerge

Argentina officially defaults on its debt

The president has already commented that the free-market policies have left Argentina "without a peso".

Mr Duhalde is the second president elected by Congress since Fernando de la Rua resigned on 20 December.

Two other leaders have been temporary stand-ins in the past fortnight.

Argentina's severe economic crisis saw interim President Adolfo Rodriguez Saa quit after only one week in office.