Argentina Instantly Puts out Speculation on National Bankruptcy

In the midst of staggering speculation on the national bankruptcy of Argentina, President Fernando De la Rua insisted Tuesday that Argentina would keep up its debt payments to investors and maintain the peso`s one-to-one peg with the U.S. dollar.

President De La Rua said in an urgent press conference, ``The creditors and the Argentina government have voluntarily consulted the plan to readjust the foreign debt of 132 billion dollars. There will be no default by the forceful readjustment.``

However, in this press conference, the Argentine president did not mention about when the government would release the economic pump-priming policy, which has been repeatedly delayed to announce.

The De La Rua government had originally planned to release in September the economic expansionary policy containing tax reduction and transfer of federal governments` income to central government for the domestic economic boost. But coupled with the terrorist attacks on the U.S. and the opposition party`s victory in the election, it has postponed to announce the economic policy.

The experts forecast that the Argentina`s default decisively depends on the economic pump-priming policy and the additional fund support of the IMF. The Argentina government will request the IMF to support the first IMF fund of 1.26 billion dollars earlier than the original plan scheduled next month.

A day after falling about 9 percent, the Merval index dropped by about 4 percent in the morning, but closed at 223.58 points, up 1.84 percent, Tuesday afternoon.

mickey@donga.com