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COPYRIGHT 2001 The Miami Herald
Byline: Jane Bussey
Apr. 23--Once the poster child of Latin America's economic reforms -- its fixed currency, free-trade pact with neighbors and privatized industries inspiring regional awe -- Argentina has turned into the case study of how things can go wrong.
Nearly three years of recession have exacted a heavy price: the Argentine government struggles to close its gaping budget deficit, international banks anticipate problems with the country's foreign debt, and workers take to the streets to protest austerity.
Last month, the government of President Fernando de la Rua tapped former Economics Minister Domingo Cavallo to return to the massive offices near the presidential palace where he first worked his financial magic 10 years ago. The hope is that he can rescue the economy from its newest quagmire.
Cavallo quickly proposed new taxes and other measures, creating additional nervousness in global financial markets. Argentina's problems threaten to spill over to Brazil, its largest trading partner, where nervous investors have quickly exited that market and forced the Brazilian real down to its weakest level since the currency was launched in 1994.
Default on Argentina's $128 billion foreign debt or devaluation of the fixed currency could shake the strong faith the region's economic leaders share in economic reforms backed by the International Monetary Fund -- the trusted remedy...
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