Argentina's new leader, reacting in crisis mode to nationwide turmoil, extended a financial clampdown yesterday and raced to create a million new jobs.
"I am here to work," a smiling President Adolfo Rodriguez Saa (54) said as he entered the Casa Rosada presidential palace three days after taking power in the wake of a bloody revolt.
But in a sign of heightening concern, the Treasury Secretary, Mr Rodolfo Frigeri, extended a five-day closure of foreign exchange markets and restricted bank transactions until January 2nd. Argentina lacks the money to open for business, said Mr Frigeri, clearly worried about a run on banks. "The country has pure net reserves of $3.3 billion and because of that the exchange holiday will continue until January 2nd," he said on Radio del Plata.
Argentina had foreign reserves on December 20th of more than $14 billion, but most of it has been set aside to back the peso's one-to-one link with the dollar. A total of almost $11 billion was in circulation or in the form of peso-denominated bank deposits.
Mr Rodriguez Saa has already declared a default on the $132 billion public debt, the biggest default in history, promised a million new jobs and vowed to create a new currency. The new currency, a contortion aimed at loosening the grip of the peso on exporters while maintaining its value, is to be used to pay government salaries, pensions, debts and buy state supplies.
Mr Frigeri said the government may also convert people's bank deposits into the new currency. "If the Argentino is worth 1.20 (to the dollar) when the time comes to return a deposit, we will have to return 12,000 Argentinos," he told Radio Del Plata.
But he insisted he had no plans to devalue the peso. A devaluation "would not help us", Mr Frigeri said. Thousands of businesses, which earn money in pesos but have debts in dollars, would be instantly bankrupt if Argentina were to devalue the peso.
It was unclear what the Argentino would be - a form of bond or a new type of non-convertible peso. And support for it was split even within the ruling Peronist party. Mr Carlos Menem, president of Argentina for a decade to 1999 and still leader of the Peronist party, declared his opposition, shattering earlier assertions of united party support for the plan.
Mr Rodriguez Saa was voted into power by Congress after the previous president, Mr Fernando de la Rua, resigned during nationwide protests and looting that killed 30.