ARGENTINA: Argentina's President Eduardo Duhalde has delayed the announcement of an economic recovery plan as he struggled to build consensus among legislators, business and union leaders.
However, Mr Duhalde confirmed that the measures, which require congressional approval, will include devaluation and the end of the one-to-one peso peg to the dollar, leaving the exchange rate to be set by open markets. The nation's parliament will convene today to pass the economic reform measures into law.
The devaluation will make exports cheaper, thus boosting employment and kickstarting an economy which has spent the past four years in deep recession.
However the end of the dollar peg will wipe 30 per cent off savings held in pesos and increase dollar-denominated debts.
In a move aimed at pre-empting citizen outrage, Mr Duhalde announced that anyone with debts of under $100,000 will be protected against losses.
Mr Duhalde, the fifth president in two weeks, must build a wider consensus among citizens if he is to survive the inevitable popular backlash that will greet a currency devaluation which reduces savings. Thousands of people took to the streets last night in anticipation of the economic measures, a reminder that Mr Duhalde's grip on power is extremely fragile.
The imminent end to peso-dollar parity has started a wave of speculation among shopkeepers while wholesalers hold back shipments of goods, preferring to sell them at higher prices after devaluation. Meanwhile Argentinians with mortgages and debts, most of which are denominated in dollars, will have to find more pesos to keep up repayments.
The Economy Minister, Mr Jorge Lenicov, yesterday confirmed that the new government would convert dollar-nominated bank loans into pesos as part of the new economic plan. The government also announced price caps on certain goods in order to avoid hyper-inflation, particularly on fuel and medicine.
Mr Duhalde's cabinet chief, Mr Jorge Capitanich, called for "understanding and co-operation" from businesses and warned of punitive measures against speculative price hikes. An estimated 300,000 diabetics faced a crisis this weekend as insulin disappeared from shop shelves, forcing the government to import emergency supplies from neighbouring Brazil.
Mr Duhalde, appointed by congress to lead the country until 2003, had previously warned of "imminent civil war" if a way out of the current crisis was not forthcoming.
The new president is in a race against time to win support for his plan to end a four-year recession that has already claimed two governments in as many weeks, leaving 30 people dead and hundreds more injured. The government plans a "sharp" reduction in public spending, as demanded by the International Monetary Fund and the US government, anxious to restructure the nation's $141 billion debt. The Bush administration is wary of Mr Duhalde, a populist who has sharply criticised the free-market policies favoured by Washington. Mr Duhalde confirmed the suspension of debt payments on Thursday when the country declined to meet a repayment on a $28 million bond, meaning the country had defaulted for the first time in the current crisis.
Thousands of Argentines lined up at banks yesterday to withdraw as much money as they could to spend the currency before its value fell. Some rushed to trade their pesos. "You fight all your life to build something, only to see it come crashing down around you because the country you live in doesn't work," said one middle-aged man, waiting outside a bank.