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Argentina: Saa's First Day - 2001-12-25


Newly sworn-in Argentine President Adolfo Rodriguez Saa began the enormous task of restoring order in Argentina after last week's chaos that toppled the previous administration. After suspending payments on the country's huge foreign debt, top on the president's list is the introduction of programs to create jobs.

As President Saa entered the government house Monday morning, on his first full day as president, he brushed off reporters' questions indicating he wanted to get straight to work. Among the many problems Mr. Rodriguez Saa must deal with in his short stint as Argentina's interim president is the creation of a promised one million jobs.

On Monday, the Peronist president said 100,000 work programs would be distributed among three of the nation's provinces in the first stage of the jobs program. Local papers reported that each government work plan would pay 200 pesos per month.

With the country's reserves declared off limits by the Peronist party, which now controls the presidency and both houses of congress, Mr. Rodriguez Saa said the country would print more of a "third currency", perhaps up to $10 billion worth. Initial estimates put the amount at closer to $3 billion to $4 billion.

The so-called third currency will be made up of negotiable federal bonds that will be used to pay off all obligations, including civil servants' salaries and pensions. The government will use the non-interest-bearing bond, the Argentino, to replace the various provincial bonds that have sprung up in recent months, as cash-strapped provinces became unable to pay workers.

In contrast to the peso and the U.S. dollar, the country's legal currencies, the Argentino won't be backed by federal reserves and will not be tied to the value of the dollar.

Many economists view the decision to float the Argentino as the Peronists' way of slowly devaluing the peso currency. One economist said that workers paid in both pesos and Argentinos would most likely spend their bonds and convert their pesos into dollars. With most change houses asking 1.4 pesos for a dollar over time, the peso would devalue.

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