Accessibility links

Breaking News

Argentina to Suspend Foreign Debt Payments - 2001-12-24

Argentine provincial governor Adolfo Rodriguez Saa, who has been sworn-in as interim president, says he will suspend payments on the financially-strapped nation's huge foreign debt. Mr. Rodriguez Saa took office a few days after bloody rioting and protests over the previous government's failed economic policies led President Fernando de la Rua to resign this past Thursday.

As expected, a special joint session of the Congress Sunday elected the 54-year-old provincial governor from the Peronist party as interim president - after a marathon all-night debate.

Mr. Rodriguez Saa is a transitional president, and will govern only for the next few months, until Argentina elects a new president on March 3.

But addressing the Congress Sunday, Mr. Rodriguez Saa announced a series of measures to begin dealing with the economic crisis that led to the downfall last week of ex-President de la Rua.

He pledged not to devalue the country's currency, the peso, which has been pegged one-to-one against the U.S. dollar since 1991 - but did say a new currency alongside the peso and U.S. dollar will be introduced to increase liquidity in the cash-strapped economy.

He also promised to launch a job creation program to employ one million people, ordered a government-hiring freeze, and placed limits on the salaries of public sector employees.

But the announcement that his interim government will suspend foreign debt payments brought some of the strongest applause.

"The debt is being paid without complying with the Constitutional requirement that it is the Congress that decides the amount due," he said. "We're going to take the bull by the horns. Argentina will suspend payments on its foreign debt."

At this, lawmakers stood up and applauded chanting "Argentina, Argentina..."

Argentina has a public debt of $132 billion, more than half of which is owed to foreign creditors. The money saved will be used for job creation and social programs.

Mr. Rodrigo Saa's announcement on the debt is likely to meet popular approval.

A school teacher, who gave her name as Maria Elena, says it was the right move. "That's how it should be," she said, "because how can you pay a debt if you're not earning money - it's crazy, and it's killing the country."

Political analyst Ricardo Rouvier says the debt announcement came as no surprise, since Peronist party leaders had already been telling reporters since Friday that such a move by the incoming President was likely. Mr. Rouvier, who heads a political consulting firm in Buenos Aires, tells VOA the impact of the decision will depend on reaction by the international financial community.

"We have to wait and see how industrial nations like the United States react, and how the multilateral lending institutions take the news," he said. "But he went on to say that officials of the International Monetary Fund have already indicated that Argentina cannot be expected to pay its foreign debt if it had no development plan or had no economic growth."

Mr. Rodrigez Saa told reporters Sunday that he will ask the international financial community for understanding and time to get Argentina's fiscal house in order.

Until taking office this Sunday, the interim president had been governing the western province of San Luis, where he is credited with stimulating economic growth and prosperity. Known for his engaging manner and charm, he once compared his optimistic outlook to that of American President Franklin Roosevelt, who helped restore confidence in the United States when it was mired in a deep depression in the 1930s.

He will remain in office for up to 90 days - time to organize an election for president on March 3. Whoever is elected will serve out the rest of ex-President de la Rua's four-year term, which ends in December 2003. Mr. de la Rua, who took office in December 1999, was driven out of office this past Thursday, following bloody protests and rioting over his failed economic policies.