Argentina Economy

In a move designed to reassure nervous investors, President Fernando de la Rua reached agreement Monday night with the main opposition governors to back a plan that would cut the budget. The agreement was announced hours after the stock market continued its plunge. The pact's details are to be announced today. "We have arrived at an agreement in fundamental concepts to arrive at zero deficit," Cabinet chief and lead negotiator Chrystian Colombo told reporters. Salta Gov.

Stocks in Argentina slid to their lowest level since 1999 on Tuesday amid a new wave of doubts that the country can solve its economic ills. The plunge also drove down stocks and currencies in other Latin American countries. Argentina's main stock index, the Merval, fell 6.1% after the government was forced to pay investors more than 14% interest on 91-day treasury bills to help refinance $850 million in dollar-denominated debt.

If Sunday's election in Argentina were up to the country's stock market, President Carlos Menem would win just about every vote cast. The applause that brought Economy Minister Domingo Cavallo near tears during a visit to the market last year was a stunning example of investors' gratitude for the stability that the Menem Administration has brought to a country where inflation ran at 200% per month just five years ago.

Latin American currencies and bonds dropped Wednesday as contagion from Argentina's deepening financial crisis spread. Argentina's stocks were whipsawed, with the Merval exchange average plummeting 7.1% before ending the day down 2.2%. Shaken by a treasury auction Tuesday in which Argentina was forced to sell short-term notes at exorbitant rates to refinance its debt, investors bailed on bonds across the hemisphere.

Indifference may best describe the reaction of world markets to Argentina's economic implosion and likely debt default and currency devaluation--a sharp contrast to the 1990s, when crises in Mexico, Thailand and Russia rippled around the globe. As expected, Argentina's new president, Adolfo Rodriguez Saa, declared a moratorium on the nation's $132-billion debt Sunday. He said he would use the savings on principal and interest payments to create 1 million jobs and feed the hungry.

In this city of walking wounded, Marta Petachi offers a bitter solution to Argentina's unending economic ordeal: "They should set fire to the whole country." "We are all poor in this rich country," Petachi, who lives in Martinez, a working-class suburb of the capital, said Thursday. "They have sold us out until we have nothing left. I cry for Argentina. Pity those of us who have very little. Because those with more have taken it and left."

U.S. authorities on Wednesday banned Argentines from coming to the United States without a visa because of worries about a growing exodus of visitors seeking to flee their economically ravaged nation and find a permanent--and illegal--home in America.

Six weeks before Argentina's presidential election, the nation's currency has taken a nose-dive, inflation has surged and the mufa , Argentine slang for angst, pervades the chatter in the capital's cafes. The one sure bet is that the power will be shut off for three hours every day, and you'd better not be in an elevator when it happens.

The president threatened to resign, but his aides said later that he wasn't serious. The economy minister, however, did resign, not long after a group of angry bank depositors shut down Congress and torpedoed his plan to rescue Argentina's ailing economy.