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Officials Say Economic Policy Unchanged in Wake of Resignations

February 19, 1985

BUENOS AIRES, Argentina (AP) _ The sudden replacement of the Argentine economy minister and central bank president did not signal a major shift in the economic policy of the debt- ridden nation, official sources said Tuesday.

Nonetheless, the peso’s value plunged in unofficial markets in what traders said was an atmosphere of financial uncertainty created at least in part by the top-level changes.

President Raul Alfonsin announced Monday night that Economy Minister Bernardo Grinspun was resigning. He was replaced by Planning Secretary Juan Sourrouille, who took over his new duties Tuesday but declined to be interviewed.

The resignation of the central bank’s president, Garcia Vazquez, and the naming of Alfredo Concepcion to replace him also was announced Monday night.

Government officials, speaking on condition they not be identified, said Alfonsin had ordered that Grinspun and Garcia Vazquez hand in their resignations, but said the move should not be seen as representing a significant policy shift.

″To talk of a change in policy is a little absurd,″ one high-ranking government official said. ″There won’t be any marked changes.″

On the unofficial, or ″black,″ market, the peso opened Tuesday at 334 per dollar compared with 324 per dollar late Monday, local news agencies said. They said traders were blaming the fall in the peso’s value in part on ″changes in the economic leadership.″

Grinspun, architect of the 15-month-old government’s unconventional economic policy, and Garcia Vazquez were the key figures in long and sometimes bitter negotiations with the International Monetary Fund and creditor banks over repayment of Argentina’s $48.4 billion foreign debt.

Argentina balked at accepting belt-tightening measures traditionally required by the IMF. The government maintained that strict austerity would cause social unrest and threaten political stability.

Nonetheless, the country reached agreement with the IMF in December on terms for a $1.4 billion stand-by loan that calls for less government spending, curbs on imports and other measures designed to stabilize the economy and rein in inflation officially registered at 776 percent over the past 12 months.

The IMF pact was used in turn to persuade foreign creditor banks to refinance debts, badly in arrears, through 1985. The banks, in an accord announced at the end of 1984, agreed to provide $4.2 billion in fresh credit.

The burly, 59-year-old Grinspun was known for his brusque, sometimes sarcastic personality, which was known to disturb some creditors’ representative s during the tough period of debt renegotiation.

An Economy Ministry official close to both Grinspun and his 44-year-old successor said the new minister’s style would be less confrontational.

″Sourrouille is more sophisticated, while Grinspun was more brash,″ the official said. ″The new minister is more a man of order, an intellectual, than Grinspun was.″

He said Garcia Vazquez was replaced to provide a fresh start in relations between the central bank and the Economy Ministry. Garcia Vazquez had often clashed with Grinspun, and the official said Alfonsin did not want any ill will to persist between the two institutions.

Official sources denied the changes had anything to do with the continued rise of inflation. The cost of living rose 25.1 percent in January and has risen to an annual rate of 776 percent from 434 percent since Alfonsin took office in December 1983.

The IMF accord calls for trimming inflation to 300 percent by September, and an IMF monitoring team now in Argentina is reported to be disturbed by the government’s failure to make any progress toward that goal.

Within Alfonsin’s own party, leaders have begun to grumble about government impotence in the battle with inflation. Ginspun had been asked to appear before the party directorship Wednesday to explain what was being done to solve the economic crisis.

Sourrouille was the author of an ambitious five-year economic plan made public in January that foresees the country pursuing economic growth at the same time as it tries to curb inflation - an approach favored by Alfonsin but viewed dimly by traditional economists, who contend austerity is the best medicine for Argentina’s economic ills.

The five-year plan calls for 4 percent annual growth in the gross national product, a 7 percent yearly boost in exports and an 11.3 percent rise each year in capital investment.

Under the plan, the foreign debt would grow to $51 billion to $54 billion by 1989. But the government maintains that would be lower than the current $48.4 billion debt if projected inflation is taken into account.

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