- The Washington Times - Monday, February 4, 2002

BUENOS AIRES Argentina's free-floating government announced an ambitious plan to rescue its devastated economy yesterday, including the partial easement of a much-maligned banking freeze. The plan also calls for moving to a peso and slashing a bloated budget deficit.
Economy Minister Jorge Remes Lenicov said he would present a 2002 "austerity" budget to Congress in the coming days and exhorted Argentines to accept more sacrifice as he seeks to end a bitter four-year recession.
"Argentina is broke," Mr. Remes Lenicov said at a news conference yesterday, rolling out the wide-ranging plan of President Eduardo Duhalde, meant to allay the crisis that toppled the last elected leader in December.
Mr. Remes Lenicov painted a stark portrait of a country whose double-digit unemployment has left 15 million of its 36 million people at or below the poverty line and where decisive steps were needed to avoid a collapse.
He said the plan's goal is to restart industrial production and ignite the economy, but added that "there are no magic solutions, and no easy solutions" as the country embarks on a wholesale transformation of its near-moribund economy.
Buying time to implement the reforms, the economy minister declared today and tomorrow banking holidays. That prohibits any currency trading and most financial transactions.
The recovery package comes after Argentina's Supreme Court ruled on Friday that the unpopular banking freeze was unconstitutional. The freeze, which began Dec. 1 and locks many dollar deposits in the banks until 2003, has been pegged as a symbol of the ongoing economic crisis.
Bidding to ease some of these hated restrictions, Mr. Remes Lenicov said Argentine workers will have unfettered access to their paychecks, which are deposited into banks and had earlier been subject to curbs.
Whereas only $800 a month could be withdrawn from the salary accounts previously, he said workers can now withdraw the entire amount in cash each month a move the government hopes will help spur consumer spending.
"The salary accounts will be absolutely free of restrictions," Mr. Remes Lenicov said, adding that retirees and workers who received compensation upon leaving the work force still will have access to their money.
Many parts of the banking freeze, however, were expected to remain intact, after Mr. Duhalde told Argentine depositors that the court ruling doesn't mean they should expect immediate access to penned-up savings.
Meanwhile, Mr. Remes Lenicov suggested he was moving as fast as possible toward freely floating the peso, which means abandoning a dual exchange rate that has been in force since an early January devaluation.
The peso was pegged at one-to-one with the U.S. dollar for more than a decade until the devaluation saw the Argentine currency lose nearly a third of its value on the open market, where it now trades at nearly 1.95 pesos per $1.
At the time he devalued the peso, Mr. Duhalde had set an official rate of 1.4 pesos per dollar for limited import and export trading. Mr. Remes Lenicov said that will be scrapped.
He said the central bank's $14 billion in hard international currency reserves and an expected $12 billion trade surplus in 2002 will be more than enough to float the peso.

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