Argentina recovery plan approved

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Posted 8:22AM on Friday, March 1, 2002

BUENOS AIRES, ARGENTINA - Argentine lawmakers have given preliminary approval to an economic recovery plan that President Eduardo Duhalde hopes will attract billions of dollars in international aid. The Lower House of Congress agreed in principle Thursday night to the proposed 2002 budget after Duhalde clinched a revenue-sharing agreement with provincial leaders forcing them to slash budget deficits by 60 percent. Deputies now will vote on the budget's separate clauses. It is expected to be approved. Chronic overspending and the resulting political and social unrest pushed Argentina into its worst economic crisis in decades last year. The country suspended payments on its $141 billion foreign debt and the peso's value plunged. Duhalde, Argentina's fifth president since December, now is being pressured by the International Monetary Fund and others to end four years of recession. In December, the IMF cut off Argentina's access to a $22 billion loan program. Duhalde was confident that the tax-revenue accord and budget would help restore those funds. ``We're convinced that we are going to receive help,'' Duhalde said of possible IMF aid. ``Because all of us together - the governors and lawmakers - are working hard to pull the country out of this crisis.'' Argentine officials say they need at least $23 billion to help prop up the economy and the country's fragile banking system, adding that the peso's devaluation left many banks practically insolvent. In Washington, IMF officials supported the revenue-sharing deal with the provinces and said a negotiating team likely will go to Buenos Aires next week. But some Wall Street analysts said the budget's projected $1.5 billion deficit is unrealistic. Some economists also insist the government's 15 percent inflation estimate will be higher as money is printed to cover deficits. Duhalde's budget also has been criticized at home. In recent days, thousands of state workers have marched on Congress, opposing proposed spending cuts in education and other areas. In La Plata, 35 miles southeast of Buenos Aires, riot police Thursday fired rubber bullets at rock-throwing public school teachers angry over budget cuts. No serious injuries were reported. Also Thursday, a federal judge ordered the arrest of former Secretary of Security Enrique Mathov for the deaths of at least five protesters during December demonstrations in Buenos Aires that prompted President Fernando De la Rua's resignation.