fifth president in two weeks
The head of the International Monetary Fund (IMF) has said it
is ready to work with Argentina to solve the debt-ridden country's problems.
But IMF managing director Horst Koehler said Argentina's
difficulties were "home-grown" and finding a solution would involve
Argentina's president has devalued its currency by 30% in a
bid to tackle the country's economic problems, including its inability to
repay $141bn of overseas debt.
Argentina's crisis was triggered when demonstrators rejected
austerity measures put forward by the previous non-Peronist government after
the IMF refused a fresh loan of $1.3bn last month.
President Eduardo Duhalde, who is the country's fifth
president in two weeks, met on Monday with leaders of the trade unions and
the popular protests that turned into riots and brought down the previous
administration shortly before Christmas.
The streets are quiet again, though Argentines were queuing
up at banks before the weekend to withdraw their savings. The government has
imposed a two-day bank holiday from Monday.
Following the devaluation on Sunday, the IMF chief and other
international financial leaders have expressed support for Argentina's new
course but stressed the country must solve its own problems.
"What Argentina needs now is growth and growth requires
savings, investment, and a working banking system", said the IMF's Mr
Koehler, who was in the Swiss city of Basle for a meeting of the Bank for
"But one also must recognise that without pain, it won't
get out of this crisis, and the crisis -- at its root -- is home-made,"
Mr Koehler told Reuters news agency.
An IMF technical mission was due in Buenos Aires on Monday.
'No quick fix'
The Bank of England's govenor, Sir Eddie George, who was
chairing the Basle meeting, said "it is not going to be a quick
fix" for Argentina.
He said the "good news" is that Argentina's
economic problems do not appear to have spread to the rest of South America.
The current chair of the European Union's finance ministers
was similarly non-committal, saying Argentina was "on the right
path" but needs to find "maximum consensus with national and
Rodrigo Rato of Spain said he was sure European finance
ministers would have "a positive role to play...in the light of
Argentina's problem at the moment."
New business taxes?
Spain is the European country whose firms have most exposure
spandish firms - such as oil company Repsol - could bear the
brunt of the Argentine government's attempts to pass the costs of devaluation
onto banks and private firms while cushioning consumers.
Argentina's economy minister plans to tax petrol exports to
cover the $15bn cost to banks of converting the dollar denominated debts of
ordinary Argentines into pesos.
Economy minister Jorge Remes Lenicov is expected to meet with
foreign investors on Monday.
To protect consumers and stave off further unrest, the
economy minister is now grappling with the threat of inflation and has urged
local firms not to hike prices in the wake of the devaluation.
"We spoke with supermarkets yesterday and they promised
to only mark up imported goods," he said.
Although the protests have calmed down, one fear
for the government now is that many middle class Argentines will start to
quit he country.
Adapted from bbc.co.uk: Monday, 7