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Argentina Interior Minister Resigns

March 17, 2001

BUENOS AIRES, Argentina (AP) _ Powerful Interior Minister Federico Storani resigned Friday, reportedly at odds with a new austerity plan aimed at combatting a near three-year recession.

The departure of Storani touched off new turmoil in President Fernando De la Rua’s Cabinet and came minutes before the government announced reforms to revive South America’s second-largest economy.

The austerity measures included a reduction in government spending and cuts in benefits for retirees.

The departure of Storani, a key figure in De la Rua’s 15-month-old administration, marked the second Cabinet crisis in less than a month and tarnished the president’s ambitious new economic reform plan.

As interior minister, one of the more powerful Cabinet posts, Storani led the country’s security forces and controlled security along the borders. He also was a leading member of De la Rua’s centrist Radical Civic Union, the dominant partner in a two-party ruling coalition.

Although Storani had no immediate comment, local reports said he opposed the plan’s deep cuts in social spending.

In a news conference releasing the economic initiatives, new Economy Minister Ricardo Lopez Murphy made no mention of the resignation, focusing instead on calls to dramatically curb government spending.

``We are not going to be able to return to economic growth if we don’t begin to examine our problems seriously,″ said Lopez Murphy, who took over in the top economic job after his predecessor, Jose Luis Machinea, quit under pressure on March 2.

Lopez Murphy’s prescription of deeper government spending cuts and calls for greater popular sacrifice to turn around the economy have opponents bristling. Union hard-liners said this week they will step up pressure on the government with a nationwide strike on April 5.

Argentina is mired in a 33-month recession. The country’s economic woes have at times threatened to unravel global emerging markets and have severely tested the durability of De la Rua’s ruling coalition.

Lopez Murphy said the country’s ballooning deficit demanded immediate action.

``Any country with a debt growing more than its ability to pay loses the confidence of investors and the economy grinds to a halt,″ he said.

As part of the plan, he said, the government will trim health- and income-benefits paid to retirees and is exploring the possible sale of government assets, including stakes in railway, airlines and energy companies.

Argentina borrows more money than any country in Latin America. The country’s foreign debt is $120 billion, close to half of its economic output.

In October, investors’ concerns that the country would have trouble making its debt payments sparked a financial crisis that lasted for months.

So far this year, industrial production, construction activity, supermarket sales, government spending and tax collections have failed to meet projections.

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