Posted on 04/25/2002 2:19:02 AM PDT by Cincinatus' Wife
Espert, the economist, said the IMF has called on Argentinean governors to make cuts that would force the dismissal of as many as 500,000 employees of the 1.2 million workers now on payrolls of state governments.
BUENOS AIRES - As Argentina flirted with deepening economic and political disarray, President Eduardo Duhalde and spendthrift governors of Argentina's outlying provinces on Wednesday evening pledged to carry out a financial rescue plan for the enfeebled nation.
Banks remained closed for a third consecutive day, enraging account-holders.
Automatic teller machines ran dry across much of the nation. Protesters banged pots noisily outside of Congress.
``We are living in hours of tremendous difficulties, Duhalde said in a short address to his nation, adding that he expects the explosive crisis to ``remain behind like a bad dream.
Duhalde, the nation's fifth president in little more than four months, signed a document with Argentina's 24 governors promising tax and banking system reforms, efforts to rein in inflation, and concrete steps to end ``unnecessary bureaucratic and political spending.
New cracks in the commercial banking system yawned open last week, triggering the prolonged bank holiday.
By government order, the banks will remain closed all week.
On Tuesday, Economy Minister Jorge Remes Lenicov quit, sparking worries that the Duhalde government was unraveling.
POLITICAL INFIGHTING
Duhalde has yet to name a replacement for Remes Lenicov, a sign that political infighting continues to weaken his administration.
Both chambers of Congress convened late Wednesday to consider plans to shore up the weakened banking system and stave off collapse.
Defying rumors, Duhalde stopped short of moves to fix the exchange rate and other measures that might distance Argentina from the world banking community. Argentina declared a default on its $141 billion public debt earlier this year and has balked at demands by the International Monetary Fund for massive layoffs in provincial governments.
The pact signed by Duhalde and the nation's governors offered a deadline of 15 days for a fiscal reform package by the provinces, and called for unspecified actions to create a ``solid and reliable financial system.
Despite Duhalde's optimistic words, some analysts forecast darker days ahead.
``The most probable scenario is continuous, sustained and unstoppable deterioration in Argentina, said economic consultant Jose Luis Espert.
HOLD ON POWER
If Duhalde, whose presidential term ends in late 2003, is forced to call new national elections, it could lead to ``an exceedingly anarchic period prior to a new leader taking office, he said.
A close friend of Duhalde's, Carlos Belgrano, said the Peronist leader had been arguing with other party chiefs that any attempt to unseat him would be disastrous for Argentina.
'Duhalde knows that if he goes, there will be major problems here. He is telling them, `It's Duhalde or chaos,' Belgrano said.
Legislators voted Duhalde into the presidency Jan. 1, and several regional leaders of his party, some of them loyal to former President Carlos Menem, wield leverage over him, adding to a perception of his weakness.
Most Argentines appear to have lost faith in politicians to resolve the nearly four-year-old recession and political crisis battering the nation.
An opinion survey published by the La Nación newspaper Wednesday showed that more than 94 percent of Argentines do not believe Duhalde will last in office until late 2003.
BANK CLOSURE
Duhalde ordered banks closed on Monday to halt a series of judicial rulings that were opening cracks in government-mandated limits on withdrawals designed to prevent a run on banks. By last week, desperate Argentines were draining as much as $50 million a day from the banking system.
To save the nation's beleaguered banks, Duhalde's government this week proposed converting about $10.6 billion in bank deposits for government bonds that mature in five to 10 years.
Savers reacted with anger, saying they wanted cash, not bonds.
Proposals before Congress, which were proposed by Duhalde's government, would block account-holders who win lawsuits against the banking freeze from making a run on the banks.
In recent weeks, the lawsuits have allowed savers to drain up to $50 million a day from the financial system.
The spendthrift ways of many of Argentina's regional governors have made multilateral lending agencies reticent to loan Argentina as much as $9 billion in desperately needed cash.
U.S. Treasury Secretary Paul O'Neill has joined a chorus of voices demanding that spending by the provinces be curbed.
Espert, the economist, said the IMF has called on Argentinean governors to make cuts that would force the dismissal of as many as 500,000 employees of the 1.2 million workers now on payrolls of state governments.
***Argentina declared a default on its $141 billion public debt earlier this year and has balked at demands by the International Monetary Fund for massive layoffs in provincial governments. ***
I guess they asked and they received. I imagine there are a lot of kick-backs.
The linked article above is part of this. Bush has said he wants to make inroads in this area and will promote his initiative to help poor nations that respect human rights, root out corruption, open their markets, and have education and health care systems.
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