MercoPress. South Atlantic News Agency

South America News. Update.

Mr. Cavallo's last round

The 2002 budget and the Federal participation agreement are the two stalling points that prevent Argentina from having access to the crucial 1,3 billion US dollars International Monetary Fund disbursement. Not only does Argentina desperately need the fresh money to honour debts, but also because it will open the door to further financial aid from other multilateral institutions such as the World Bank, Interamerican Development Bank, even countries like Spain and even possibly the US Treasury. However achieving a reasonably and believable balanced 2002 budget, given Argentina's recent record and the ever growing political isolation of the current administration is hard to anticipate. Finance Minister Domingo Cavallo so far, and is spite of all his efforts including slashing government salaries and pensions, has only been able to deliver partially on his previous promises to the IMF, including the zero deficit budget. Something similar can be said of the Federal participation agreement which is the sharing of federal funds with provincial governments, mostly under opposition Peronist rule, particularly the outstanding ones, and in many cases unable to pay salaries or honour debts. Mr. Cavallo's character and impatience, plus the lack of sufficient funds have made a dialogue with the governors almost unattainable. Besides, the latest measures to prevent money from leaving the country, (banks have lost 24 billion US dollars in deposits since last April), limiting cash withdrawals to a thousand dollars a month and forcing most payments through the banking system or debit and credit cards, have caused chaos for the everyday man. With this scenario, and even if Mr. Cavallo has been relatively successful in the bond swap operation, (apparently over 40 billion US dollars), the growing perception in Buenos Aires is that his moment of glory is setting and even president De la Rúa's continuity is questioned. After the October legislative elections, the ruling coalition has ceased to exist and the Peronist now comfortably dominate Congress and even named the acting vice president. How long can this situation survive? A couple of Congress members suggested the time has