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. Last Updated: 07/27/2016

Argentines Rally Behind Duhalde

BUENOS AIRES, Argentina -- President Eduardo Duhalde on Friday took the political initiative in Argentina's long crisis, sending Peronist militants into the streets hours after winning a vote for a dramatically austere budget in Congress.

Thousands of flag-waving loyalists rallied by the parliament building in a stage-managed show of support for the two-month-old government, besieged by daily protests against hated bank curbs and unemployment that touches one in five of the workforce.

"If we had anyone better that would be OK, but we have no other option than Duhalde," said Maria Del Rosario, an unemployed woman from a poor industrial suburb, in a rare sign of support for a leader whose approval ratings slumped after he introduced a messy devaluation to rescue the economy from a four year recession.

The lower house Chamber of Deputies, dominated by Peronists, passed an austere budget as the sun rose Friday after an all-night debate.

Deputy Economy Minister Jorge Todesca said an IMF mission would now arrive for talks in Argentina next week for billions of dollars of vital aid conditioned on the government passing severe spending cuts.

Despite the pro-government march, public rage at politicians runs high. As Duhalde spoke, a thousand people protested for jobs in the city center. Protesters angry at the bank curbs pelted Congress with feces as the budget debate began Thursday.

Duhalde defended his policy plank of devaluing the local currency, which has now fallen more than 50 percent against the U.S. dollar, and made it clear that he would never adopt the dollar as the official currency -- a reform touted by many of his opponents to quash any threat of inflation.

"Dollarization would have condemned the nation," Duhalde told a packed session of Congress.

Spending is to be slashed by more than 14 percent below 2001 levels in this year's budget. The bill goes to the Senate for consideration, probably next week.

Argentina is seeking International Monetary Fund cash to help it recover from four years of recession, a default on part of its $141 billion public debt and a more than halving in the value of the peso currency in two months.

Argentina, looking for up to $25 billion from the IMF and other international lending institutions, has constantly failed over the last few years to meet promised economic and fiscal targets agreed with the lending body. The IMF must first extend loans before the World Bank and Inter-American Development Bank can pump money into the country.

Economists say the budget's macroeconomic estimates -- such as 15 percent inflation in 2002 -- are overly optimistic.

"Negotiations with the IMF could still take months before delivering any material support, since Argentina still needs to come up with a solution to two big problems: what to do about the [foreign-exchange] market, and what to do about the balance sheet of the financial system," said HSBC emerging-market analyst David Lubin in London.

The IMF, which earmarked over $20 billion in aid to Argentina over the past year with little to show for it, has taken a hard line in recent weeks.

But it welcomed a deal between Duhalde and powerful provincial governors under which the federal government will scrap a $650 million monthly minimum in grants to the regions.

Instead, the government will give the provinces a percentage share of tax revenues, which are dwindling as economic activity drops. A government source said on Friday that tax income in February fell 22 percent to 23 percent compared to a year ago.

Even if IMF cash for Argentina looks slightly more possible, the government must still try to prevent social upheaval in this nation of 36 million people.

Witnesses said some 1,300 police sealed off streets around the parliament building where Duhalde supporters bearing banners and drums began arriving for the "Yes March."

The Peronists often bring shanty town dwellers into the city center on buses for big rallies with the help of free food and transport.

The event is the first mass show of support for politicians since President Fernando de la Rua was forced from office by protests and food riots in December that killed 27 people.