Argentina seeks alternative to savings freeze

Argentina is scrambling to find another way to end a despised freeze on depositors' savings after scrapping plans to convert …

Argentina is scrambling to find another way to end a despised freeze on depositors' savings after scrapping plans to convert the deposits to bonds.

With daily protests against the rapid spread of poverty and the deposit freeze, President Mr Eduardo Duhalde needs to come up with a replacement for the bonds-for-savings plan, and fast.

But he won an unexpected reprieve thanks to the weather when hard-line unions postponed a 12-hour strike and marches planned for today because of heavy rains that forced nearly many people to flee their homes in Buenos Aires province.

The government also averted defaulting on a $680 million debt payment to the World bank by using Central Bank reserves as recommended by the United States. Defaulting on payments to multilateral lenders could cut off the last remaining avenue to aid - an option that one official described as "suicide".

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Inter-American Development Bank chief Mr Enrique Iglesias has approved a $700 million loan for social programmes after visiting Argentine Economy Minister Mr Roberto Lavagna, the country's sixth economy chief in just over a year.

Mr Lavagna had earlier met his economic team to devise a new strategy to help free up the creaking banking system and convince international lenders to deliver aid needed to help relieve the country's grinding four-year recession.

Officials say the bond plan was abandoned because the banks were unhappy with it, and implementation costs were high.