MercoPress. South Atlantic News Agency

“Devaluation maniacs”

“Devaluation maniacs”

As Sunday October 14th. approaches when Argentina will vote in a new Senate and renew half the Chamber of Deputies, financial markets are hyper sensitive and speculating what can happen the following Monday when the political support for the current President De la Rúa administration will be even more uncertain than now, according to the latest polls.

Last week the risk component for Argentine bonds reached almost 1900 points, the stock exchange dropped to its lowest in a decade, while tax revenue confirmed that the Argentine economy is paralysed triggering an open controversy over whether the country should formally accept the US dollar as its official currency or anticipate a default and a strong devaluation of the peso.

Economy Minister Domingo Cavallo who's been at the helm for several months managing to reschedule part of Argentina's 128 billion US dollars foreign debt, obtain fresh international funds on condition the country strictly complies with a "zero-deficit" policy, aggressively denounced the initiative as a plot master minded by "devaluation maniacs" who want to run off with Argentines savings.

"The one peso-one dollar exchange rate is here to stay and to guarantee the Argentine people savings", stressed Mr. Cavallo, "to devalue is madness".However, rumours then turned on Mr. Cavallo's possible resignation even before Sunday's elections.It was President De la Rúa's turn to confirm the permanence of his hyper active Minister, but also anticipating a cabinet reshuffle after the elections results are in.

Although polls indicate that many Argentines are thinking of protesting by spoiling their ballots or simply not voting, forecasts show the opposition Peronist party will recover control of the Chamber of Deputies and confirm its muscle in the Senate, meaning the end of the current coalition "Alianza".

Mr. De la Rúa would then have to sit to discuss governance with a Peronist Congress, which is also split regarding the very draconian measures committed internationally by Mr. Cavallo and his team of "zero-budget" experts in a country that is rolling full speed into its fourth year of recession."A political convergence is inevitable and a more rational administration to reach the targets commi