- The Washington Times - Tuesday, November 6, 2001

BUENOS AIRES (AP) Government officials continued to hammer out a plan yesterday to restructure the country's crushing debt load and prevent a default on billions of dollars owed to foreign and domestic lenders.
The mega-debt swap announced by President Fernando De La Rua aims to save the country $4 billion in interest-rate payments next year and to ease investor concern that a default is imminent for this troubled South American economy.
Assuming Argentina is able to persuade investors to trade in higher-yielding bonds for lower ones, economists still remain skeptical that the latest series of economic measures announced last week will be enough to pull the country out of three years of recession.
"Let's imagine the swap goes well and everyone swaps bonds," said Argentine economist Enrique Cerda Omiste.
"It's a national success: interest-rate payments drop by $4 billion. However, total interest-rate payments in 2002 will total $14 billion, requiring a huge cut in spending to meet the balanced budget."
Further cuts will be nearly impossible for Argentines to swallow.
Seven sets of spending cuts in two years have chopped public workers' salaries by 13 percent.
In the cash-strapped provinces, violent riots and sporadic social unrest have led governors to threaten to sue the national government for overdue funds.
"The government doesn't have any political or social leeway to impose more spending cuts," said Nicolas Caruso, an economist at Scotiabank Quilmes.
Despite the scarcity of details about the plan, investors pushed the benchmark Merval index up 3.2 percent, or 7.13, to 229.63.
They apparently on the on news that the government may be close to reaching an agreement with provincial governors on tax-revenue payments.
Analysts noted that public opinion hasn't kept Mr. De La Rua from implementing unpopular measuresin the past in the past.

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