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Argentina's President to Announce Economic Plan - 2002-01-04


Argentina's new president Eduardo Duhalde swore-in his partial cabinet on Thursday, one-day after taking office as the country's fifth president in two weeks.

Top cabinet members refused to discuss the details of the president's economic plan but most Argentines are bracing for devaluation.

Mr. Duhalde named a loyal aide, Jorge Remes Lenicov, as Argentina's new economy minister. Mr. Remes takes a more skeptical view of free market economics than his predecessors and is expected to introduce more protectionist economic measures.

He refused to speak to reporters upon leaving the ceremony saying only he would present his economic plan to the public Friday.

Cabinet Chief Jorge Capitanich later told reporters the economic plan would be sent to Congress late Thursday and that he expected it to be passed into law over the weekend. Mr. Capitanich refused to comment on a possible devaluation of the peso currency but he called on local shop-owners to refrain from marking up prices in anticipation.

In downtown Buenos Aires, some stores with imported goods began to increase prices ahead of the widely expected devaluation.

Argentina's peso currency, which has been pegged to the U.S. dollar by law since 1991, is expected to lose between 30 and 40 percent of its value under the devaluation scenario. Many industrialists, including newly sworn-in Production Minister Jose Ignacio De Mendiguren, blame Argentina's strong currency for the country's economic problems.

And while the devaluation is likely to help exporters and national industry compete it will also hit many middle-class Argentines and companies who owe debt in dollars. Around 70 percent of Argentine private debt is dollar-denominated.

If the economic plan includes a law that changes these dollar obligations into peso debt, as most expect, the impact will be lessened.

U.S. President George W. Bush sent Mr. Duhalde a congratulatory letter Thursday promising to work with the new administration while the IMF said they had yet to make substantive contact with the new government.