Argentina toils with economic blueprint as financial crisis keeps banks in limbo

Argentina's president, beset by his biggest political crisis since taking power, struggled to fill an important post yesterday and draft new policies to resuscitate an unraveling economy.

After Jorge Remes Lenicov resigned on Tuesday as Economy Minister, President Eduardo Duhalde spent the day wrangling with political leaders over a cabinet overhaul that would keep his beleaguered caretaker government together. The departure of Remes Lenicov prompted crisis meetings and marked the biggest threat to the government since President Duhalde took power in January.

It also came as a grim mood hung over the capital. Angry pensioners lined up to receive monthly benefits despite a government-imposed "financial holiday" that has kept banks shut since Friday.

The Central Bank allowed select banks to open their doors for the pensioners to collect their allowances. But all routine banking operations remained halted, and the stock exchange stayed closed.

In the biggest cities, Argentines found many automatic teller machines had run dry of cash. Paul Aguirre, a government worker, said: "I have five kids at home, and there's no money in the cash machines. What am I to do? I don't have a peso in my wallet."

In the throes of the worst recession on record, Argentina is grappling with 18 per cent unemployment, a devaluing peso and calls in the international community for the government to find a credible rescue plan.

President Duhalde met powerful Peronist governors yesterday at his suburban residence to haggle over the outlines of a new blueprint for the economy and his proposed cabinet changes. Argentina's fifth president since December, when looting and rioting claimed more than two dozens lives, Mr Duhalde was trying to break an impasse within his own Peronist party on how to move forward.

Mr Lenicov came away empty-handed from Washington last weekend in attempts to wring new aid from the International Monetary Fund. Analysts said his failure to win support for an emergency plan to shore up the fragile banking system was the last straw.

Senate leaders said yesterday new initiatives were on the way and that they would debate a bill that would block Argentine bank depositors who have won court lawsuits from removing millions of dollars from a 1 December banking freeze – at least until a government appeal is heard.