MercoPress. South Atlantic News Agency

Governors reject agreement

The consideration of the Argentine budget in Congress, a vital piece of legislation that should help open the way for overseas financial support to a bankrupt Argentina, is stalled after provincial Governors rejected the Duhalde administration proposals.

Governors are demanding a tax share from the central government of approximately 680 million US dollars per month, which President Duhalde has repeatedly said there's no way the sum can be committed under the current recession conditions and revenue dropping dramatically.

Duhalde desperately needs the approval of an austere and reliable budget before he can request multilateral organizations such as the International Monetary Fund, IMF, additional credit to get the economy rolling again. .

IMF Deputy Director Anne Krueger, considered a hard liner, and given past experiences, said early this week that under the current circumstances "there's no reason to lend money to Argentina". .

The Duhalde administration has insistently argued that without foreign aid and support it will be extremely difficult to recover the Argentine economy after almost 44 months of recession. .

Powerful Governor Federcio Solá from Buenos Aires province, after the last round of talks said that "some points of the sharing agreement must change, otherwise we're out". .

Most Argentine provinces, as the central government, have virtually defaulted, or are printing money in an attempt to pay salaries and keep minimum services. .

The current budget in Congress anticipates for 2002, a GDP drop of 4,9%; 15% inflation; 1,5 billion US dollars deficit and an overall 14% expenditure reduction. .

A similar situation last December, when the former president De la Rúa administration and his then Finance Minister Domingo Cavallo were unable to reach an agreement with the Governors forced the collapse of the government and rioting in the Argentine capital and several provinces. .

Since then and several presidents later, Mr. Duhalde after managing strong support in Congress, devaluing the peso 50%, --as requested by industrialists--, seems caught in a similar challenge.