Buenos Aires, Argentina — Argentina's lower house of Congress approved an emergency economic plan late Saturday in a key vote to grant President Eduardo Duhalde broad powers to devalue the peso and try to rebuild the shattered economy.
The Chamber of Deputies voted overwhelmingly to approve the general outlines of the bill in an early victory for Duhalde, who took office Wednesday as Argentina's fifth president in two weeks. The lawmakers then went line by line over the bill, preparing to submit it today to the Senate. Duhalde's Peronist party holds a majority in the Senate, and approval is virtually assured.
The legislation would grant Duhalde special powers to ease the peso's decade-old one-to-one peg with the U.S. dollar, reform the banking system, control prices and protect local industry and jobs. It marks a sea change in economic policy, shifting Argentina away from a fixed currency regime and unbridled free market practices.
Although the bill did not specify a new peso rate, government officials have indicated they would set a fixed rate of about 1.4 pesos to the dollar for finance and business transactions. Ordinary Argentines would have to buy hard currency on the open market, probably at a higher rate.
The Senate was expected to begin considering the bill today, clearing the way for Duhalde's government to devalue the peso.
Presenting the bill Friday, Duhalde told lawmakers he needed special powers to rebuild the crumbled economic foundations of a country whose banks, currency and political institutions have been devastated by nearly four years of withering recession.
During their marathon debate Saturday, the lawmakers received new proof of the calamitous state of the nation's finances: The 2001 budget deficit is now expected to top $11 billion, nearly twice the target agreed to last year with the International Monetary Fund.
Cabinet Chief Jorge Capitanich said plummeting tax revenues from an economy in a tailspin were to blame for "the shocking figure."
Declaring a "public emergency in economic, financial and exchange rate" policies, the bill before Congress aims to "create conditions for sustainable economic growth" that will allow the government to renegotiate Argentina's staggering $141 billion debt.
Mired in nearly four years of bitter recession, Argentina last week defaulted, missing a $28 million payment on a foreign bond for the first time.
The crisis has begun to affect foreign businesses, including U.S. banks.
The emergency plan seeks to spread the pain of devaluation across all sectors of the South American country's economy.
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