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Argentina makes trade specialist sixth economy minister in a ye

Saturday, April 27, 2002

BUENOS AIRES, Argentina -- Argentina's president enlisted a trade specialist and former diplomat to be his economy minister on Friday, the sixth person recruited over the last year for the job of rescuing a ravaged economy and a financial system bordering on collapse.

Roberto Lavagna, Argentina's ambassador to the European Union, took over as banks across the country gradually reopened following a four-day government shutdown that left the economy near a standstill.

The government said Lavagna's first task will be to "anchor" the peso to the dollar. President Eduardo Duhalde abandoned the one-to-one peg to the dollar days after taking office in January. He insisted an overly strong peso was the cause of the Argentina's financial morass.

Since then, the peso has lost nearly 70 percent of its value, accelerating inflation.

"The president has proposed implementing an anchor for the currency and we have to decide the best way to do it," said government spokesman Anibal Fernandez.

Lavagna, 60, is a former commerce secretary who advocates strong trade ties with the international finance community, expertise he may well need if he is to ease Argentina's devastating four-year recession.

Duhalde had been searching for days for someone to replace his longtime aide Jorge Remes Lenicov, who resigned after political support evaporated for his efforts to both secure new international and prop up the fragile banking system.

Hours before his confirmation as the top economic chief, Lavagna called on political leaders "to work together" to end the turmoil that has forced Argentina to default on its $141 billion debt and left one out of every five Argentines jobless.

'Revolving door' no help

Some Argentines said the change would do little to instill confidence among a recession-weary populace wilting under the country's worst economic crisis in history.

"A revolving door of economy ministers only adds to the insecurity," said schoolteacher Martin Disante. "It seems every few months the government tries something different, and that is a big part of the problem."

Lavagna will immediately face pressure from international lenders for spending cuts. But such calls have been rejected by many Argentine politicians, who say more austerity will only drive their country deeper into recession.

Among his challenges, Lavagna needs to help Argentina restore confidence among international investors after the government's debt default last year. The International Monetary Fund is calling for reductions in spending as a precondition for fresh aid.

He also needs to seek a secure exit from a Dec. 1 banking freeze that has provoked angry protests.

The partial banking restrictions allow Argentine depositors to make only limited cash withdrawals from their accounts, but successful lawsuits challenging the freeze have raised worries for the future of the fragile banking system.

On Friday, legislation took effect that would block depositors who win lawsuits from retrieving trapped savings until the government can appeal.


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