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Argentina economy minister resigns
By The Associated Press
Last Update: 1:52 AM ET Mar 20, 2001
BUENOS AIRES, Argentina (AP) -- Argentina's economic minister resigned Monday night just two weeks after assuming the post and pushing a controversial plan to re-ignite South America's second-largest economy.
Ricardo Lopez Murphy offered his resignation three days after announcing a plan calling for $4.5 billion in spending cuts to help extract Argentina from a grinding 33-month recession.
President Fernando De la Rua said Domingo Cavallo, an internationally renowned economist, would either become economy minister or cabinet chief, the second most powerful position in government. Cavallo "will be in charge of directing the country's economy," De la Rua said after more than four hours of meetings with top officials.
The austerity plan announced by Lopez Murphy on Friday caused the Frepaso party, the junior partner in De la Rua's two-party Alliance coalition, to withdraw all of its officials from the government in protest.
De la Rua was working on Monday to build a national unity government incorporating several parties from across Argentina's political spectrum. All the parties pledged their support, but only if Lopez Murphy's proposed cutbacks were scaled back. Lopez Murphy said he could not remain as the country's top economic official if that happened.
De la Rua is seeking support amid the most serious political crisis of his 15-month presidency.
In a sign of mounting opposition to the austerity plan, trade unionists and students disgruntled over the reforms promised to stage national strikes this week.
Hundreds of jobless workers threw up roadblocks around Buenos Aires and angry university students staged sit-ins and blocked traffic on major boulevards.
Authorities on Monday reported a small bomb explosion at the offices of an economic think tank. No injuries were reported, police said, but leaflets found at the scene denounced the proposed economic reforms.
Speaking with reporters earlier Monday in Santiago, Chile, De la Rua said he was planning to add Domingo Cavallo to his Cabinet - which lost three people to resignations on Friday. Cavallo is the leader of the center-right Action for the Republic Party.
The architect of Argentina's plan pegging the peso one-to-one with the U.S. dollar, Cavallo will help the president regain credibility with investors. A Harvard-educated economist, Cavallo has helped advise Russia and Ecuador through financial crises.
Argentina's economic woes worsened in October amid investor concerns that the economy would have trouble making its debt payments.
Financial markets calmed after the International Monetary Fund engineered a $40 billion dollar emergency aid package in December. It requires Argentina to reduce its budget deficit for this year to $6.5 billion.
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