- The Washington Times - Tuesday, January 22, 2002

BUENOS AIRES The Argentine government fine tuned over the weekend an economic plan that President Eduardo Duhalde hopes will get the IMF blessing needed to obtain a multibillion-dollar financial-aid package.
He already had received signals of support from the International Monetary Fund and from President Bush.
Details of the plan revealed by Mr. Duhalde largely reflect the IMF’s anti-crisis recipe, based on budget austerity and monetary discipline.
Economy Minister Jorge Remes Lenicov made it clear the plan won’t be finished when he travels to Washington later this month to present it to the IMF and the Bush administration.
“The sustainable plan will be ready in 20 days,” he said in an interview published Sunday by the Clarin daily.
“With this plan, we will go to negotiate with the IMF to get outside support,” he said. Argentina is expected to seek between $15 billion and $20 billion in financial aid.
Mr. Remes Lenicov said the government would present “a global, realistic and coherent program.”
Mr. Duhalde has indicated the plan would complete the “pesofication” of the economy that started Jan. 6 when Congress passed legislation scrapping the 11-year-old parity between the peso and the dollar.
Contrary to a promise he made shortly after taking office Jan. 1, Mr. Duhalde indicated Argentines who have savings in dollars would get their money back in pesos. Dollar-denominated credits and debts also would be converted into pesos.
While it is still working out details of the plan, the government has indicated the swap probably would be done at the rate of 1.4 pesos to the dollar, the rate the government has adopted for certain transactions.
In a move recommended by the IMF, the government plans to do away with that fixed rate eventually, maintaining only the flotation of the currency.
Since it made its free-market debut, the peso lost about 50 percent of its value, but the government has expressed confidence it would stabilize and dismissed fears of an inflationary cycle.
In the first two weeks of January, which included the peso’s first three days on the free market, consumer prices rose 1.5 percent. The government projects an inflation rate of 11 percent this year.
Production Minister Jose Ignacio de Mendiguren on Sunday said he was confident Argentina would recover from the crisis, as Brazil and Russia did in the past.
Members of Mr. Duhalde’s economic team plan to hold a series of meetings with their counterparts in Brazil, Chile and Mexico, which have had to battle major devaluations in the past.
Almost four years of recession have left Argentina unable to service its $141 billion public debt and have exacerbated social tension in a country where one third of 36 million residents live in poverty.
Violent protests last month lead to the collapse of two governments. In the past weeks, a number of peaceful demonstrations ended in clashes between police and protesters who smashed banks and store windows.
Mr. Duhalde also faced sharp criticism from foreign-owned utility companies, which strongly objected to his decision to end a system that allowed them to peg their rates to the dollar and U.S. inflation.
In another development, Mr. Remes Lenicov said Sunday that the government will start negotiations next month with utility companies, adding that the mainly foreign-owned firms should not be making huge profits in a time of crisis.
“They will be invited in 30 days to renegotiate their contracts and establish realistic profits,” he said in an interview with Clarin.
The companies have harshly criticized the anti-crisis plan adopted by Congress.
“There are sectors that conspire against the economic plan because they prefer the dollarization of the economy to maintain their privileges,” the minister said.
“Another thing is that companies do need returns on their investments, but not huge earnings in the midst of the most serious crisis Argentina has had in the past century,” he said.
He also dismissed claims that foreign companies are planning to leave Argentina.
“It’s a lie. Nobody leaves a country because of what happens in 15 days,” he said.
Asked whether the government caved to pressure by oil exporters opposed to a new tax, Mr. Remes Lenicov said: “No. The taxes to compensate for the huge earnings the devaluation will generate for oil exports will be applied.”

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