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Going Nowhere Slowly

Jun 1, 2002

With Argentina's provinces and banks withdrawing support, the federal government is running out of options to keep the financial system alive and revive the economy.

President Eduardo Duhalde appears increasingly nervous as the odds stack up against his shaky government. Each advance in the struggle to piece together the shattered economy is followed by a series of reverses. Indeed, it often seems that the government is only managing to stagger on because nobody dares take the risk of demanding fresh elections, for fear of the verdict of the polls. Yet the endgame probably started toward the end of May, when Felipe Solá, the governor of Buenos Aires province, said he would refuse to comply with an earlier agreement with the federal government to cut his budget deficit by 60% this year, unless Duhalde promised to guarantee sufficient revenues to meet the province's $2.7 billion spending plans this year, an intentionally impractical demand. Buenos Aires is the largest, most populous province in the country and its governor among the most powerful men in Argentina. Duhalde,...

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