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Argentine Finance Resignation Caps Tumultuous Week - 2001-12-15

The resignation of a top economic official capped a tumultuous week for Argentine President Fernando De la Rua's administration. The resignation is the latest in a series of top-level defections and comes as Argentina struggles to avoid default on its $132 billion debt.

Argentina's Finance Secretary Daniel Marx said Friday he was resigning for what he described as "family reasons." He denied his resignation had anything to do with personal differences between him and Economy Minister Domingo Cavallo. Instead he said he had a good working relationship with Mr. Cavallo and added that he would continue to advise the government.

Marx's resignation was the latest blow to Mr. De La Rua's battered two-year old administration. The president, whose approval ratings are at an all time low, also faced a nationwide 24-hour strike Thursday, called by the country's three largest labor unions. The strike, which shut down public transportation, was the eighth such protest action Mr. De La Rua has faced since assuming office.

Many small businessmen and shop owners also took part in Thursday's strike. Shop owners are furious over a December 1 decision to limit bank withdrawals. The measure was imposed to stop a run on banks after jittery Argentines withdrew $2 billion in just one day on November 30.

The government was also hit by new unemployment figures that show 18.3 percent of Argentines were out of work in October nearly breaking the record 18.4 percent rate of May 1995. With the under-employed added to the mix, nearly 35 percent of Argentines are looking for work.

Local economists say the situation can't continue, and many people are doing everything they can to get their money out of the banks.

Most Argentines are locked into dollar denominated debt and a devaluation of the peso currency, currently pegged at one peso to the U.S. dollar, would force millions into bankruptcy.

The only bright spot was word that the government had met its obligations with foreign and local bondholders Friday.

Argentina has about $181 million in interest payments due next week and another half-billion dollar payment coming due December 28. Some reports say the government plans to make that payment with money from the nation's private pension funds.