Argentina's newly nominated President finally announced what had been anticipated for months, a moratorium in the country's massive 132 billion US dollars debt, averting a political and institutional crisis that threatened to plunge Argentina in disarray.
President Adolfo Rodríguez Saa announced before Congress that Argentina will suspend the payment of foreign debt, and is spite of the spontaneous cheering, added that "this is not a rejection of foreign debt, but rather the first move by a rational government to deal correctly with the foreign debt". In spite of being the biggest default in history, analysts believe that it will not create a world financial panic since investors had long moved to limit exposure while Argentina's former government battled unsuccessfully for months to turn the situation and put an end to four years of recession and record high unemployment. Civil disobedience, followed by violent rioting in the main cities of the country, 29 people killed, hundreds of businesses looted, forced the resignation of Finance Minister Domingo Cavallo, and a few hours later President Fernando De la Rúa who was unable to muster further political support. However in spite of the relief and smiles, the situation is still tense. President Rodríguez Saa besides anticipating austerity and a balanced budget, confirmed that the controversial fixed peg of the local currency -one US dollar to one peso--, will remain, (no devaluation), promised the creation of one million jobs with the money saved from debt payments and compensations for families who had relatives killed and retailers who lost assets during the looting. Bank deposits will also be respected. Many local economists, politicians and businessmen, including international analysts believe that the fixed one US dollar-one peso and Argentina's successive governments inability to rein the budget are among the main causes of the current situation. On the political front, Mr. Rodríguez Saa, a provincial governor, will only hold the job for at the most three months since elections will be held next March to elect a president that will complete the two years left of former president De la Rúa. This is also a controversial decision since far from being evidence of the political might of the Justicialista party that dominates Congress, is proof of the lack of a clear leadership. The Justicialista party was unable to decide on a candidate to complete the remaining two years, until Decemb