BUENOS AIRES, Argentina (AP) _ With national finances crumbling, the government on Thursday tightened its grip on the banking system, freezing more of Argentines' savings in an effort to keep the country limping along.
After days of juggling the devastated accounts of the nation, the government finally unveiled a plan to protect banks from mass withdrawals by panicked depositors _ at least for the next months.
It announced money over $10,000 in checking accounts and $3,000 in savings accounts will be switched into fixed-term deposits that will be off-limits to depositors for at least a year.
Argentines had expected the government of President Eduardo Duhalde to lift banking restrictions Thursday, but instead it extended a ban on foreign exchange transactions until Friday, when people exchanging pesos for dollars must pay a floating rate.
Smaller balances could be transferred into pesos at the new official rate of 1.4 pesos to the dollar and withdrawn according to limits in place since Dec. 1, after a run on banks saw Argentines yank $2 billion in a single day.
Argentines can now withdraw 1,500 pesos, or just over $1,000 at the new official rate, from their checking accounts monthly, and an extra 1,200 pesos _ about $860 _ from savings accounts.
Waiting in line at a downtown branch of Banco Rio, Marcelo Borselli, a 31-year-old security guard who earns $570 a month, was desperate to withdraw his savings.
``I need to get my hands on my money. The government has to lift these restrictions,'' he said.
The next move the government could make _ lifting a ban on foreign exchange transactions, in place since street violence ousted former President Fernando de la Rua last month _ is fraught with danger.
The government has eased the peso's decade-old peg to the U.S. dollar to 1.4 pesos per dollar for imports, exports and large-scale business transactions, in the hope of boosting local industry and exports.
But ordinary Argentines buying hard currency must pay a floating free-market rate. If that rate plummets, it could set Argentina on a course for the kind of hyperinflation that wracked the economy in the 1980s.
Deputy Economy Minister Jorge Todesca said government would soon try to renegotiate its foreign debt.
Confidence is hardly likely to return short-term, as Argentines and Wall Street analysts alike fear the government is making up policy as it goes along.
``There's no time for test runs, changes of plan or U-turns,'' read a front-page editorial in the business newspaper Buenos Aires Economico. ``The government ... has increasingly less room for maneuver to find a serious and rational path to lead the country out of turmoil.''
President Duhalde, a populist critical of free-market economics, is trying to soothe both Argentines and angry foreign investors who sank nearly $90 billion into Argentina between 1994 and 2000.
Walter Molano, chief Latin American economist at BCP Securities in Greenwich, Conn., predicted foreign banks will be loathe to bring in fresh capital to prop up their Argentine operations in the current climate.
``It is not logical to surrender precious resources in order to save a marginal market,'' he said. ``I would not be too surprised to see foreign owners walk away. They made a bet, and lost.''