The resignation of Argentina's president last night will probably condemn the long-troubled economy to imminent chaos as a debt default and currency devaluation loom, economists think.
Ex-president Fernando de la Rua's sudden departure after demands for his resignation following the exhausted country's worst rioting in over a decade could send countless people and companies careening into bankruptcy if his successor, as yet unnamed, fails to control the crisis.
'Argentina's practically already in default, and devaluation is now the next step,' a US analyst commented.
Fearing their life savings could be instantly wiped out or confiscated by the cash-strapped government, many Argentines poured what money they had into anything they could find with real value - including stocks, real estate, autos and jewellery - while others stashed dollars under their mattresses.
Widespread panic followed the resignation early yesterday of unpopular Economy Minister Domingo Cavallo - whose tough public salary cuts and controls on bank deposits only made the long slump worse.
Thousands of mostly peaceful protesters took to the streets yesterday to demand the end of policies that have left more than 18% unemployed and a third of the nation in poverty. Protesters accuse the government of sacrificing the poor to service the $132 billion public debt, which has already been written off by skeptical foreign investors.
At least 22 people were killed in widespread looting that led the government to declare a 30-day state of siege before De la Rua resigned.
Many believe the next government will end the decade-old peso-dollar currency peg known as Convertibility. Introduced by Cavallo in 1991 to end hyperinflation, the peg helped to stabilise the economy.
But it has since become something of an albatross, as the peso is seen as overvalued, helping to make the Argentine economy less competitive.
The International Monetary Fund, which this month blocked $1.3 billion in Argentina aid because of chronic overspending, has promised to support a new economic team. IMF First Deputy Managing Director Anne Krueger said that she was concerned by events, but did not fear broader contagion to emerging markets.
