Argentina appeared set today to declare the biggest debt default in history as a new president prepared to take power after a bloody, popular revolt.
Congress, controlled by the populist Peronist party, was to meet later in the day to appoint provincial governor Adolfo Rodriguez Saa as president until the March 3 elections.
Mr Rodriguez Saa, a 54-year-old long-standing Peronist, must lead a country writhing in financial agony, crushed by its $132 billion debt after a 43-month recession, and swept by unrest.
Fire-gutted shops and smashed windows lined the quiet streets of central Buenos Aires after two days of riots killed 26 people and toppled former president Fernando de la Rua. Quoting economists who helped draw up Mr Rodriguez Saa's plan, Argentina's conservative La Nacion newspaper said he would announce a suspension of payments on the public debt.
Under the reported economic plan, he would:
- Formally declare default. The government would halt payments on the debt until an election is held. It would then negotiate a debt restructure, including a reduction in capital.
- Stand by the peso's one-to-one peg with the dollar, a system known as convertibility, until there are greater reserves and more confidence in the central bank. Experts say this may prove hard to sustain.
- Relax tight financial restrictions imposed this month. Under the rules, Argentines are not allowed to withdraw more than 1,000 pesos ($1,000) a month in cash or carry more than $10,000 abroad.
- Issue bonds. Funds raised would allow the government to pay some of the December wages and inject liquidity into the country.
- Provide social security to the unemployed, presumably with an existing tax on financial transactions, and set up food aid.
``This provisional government must count on the support of everyone, the most humble, those who suffer, those who are unemployed - I will govern for them,'' Mr Rodriguez Saa said after caretaker president Ramon Puerta named him as the choice of the Peronist party.
``We have to think of a new economic policy,'' he said, promising to reveal a set of ``very important'' proposals for the country, without elaborating.
Shortly before being nominated, Mr Rodriguez Saa said he favoured declaring a default on Argentina's public debt.
AFP