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. Last Updated: 07/27/2016

Argentina Defies IMF Demands

BUENOS AIRES, Argentina -- The Argentine government on Sunday resisted demands by the International Monetary Fund for more provincial budget cuts as a condition for a sorely needed aid package, fearful that new austerity measures would lead to another round of deadly rioting.

Hundreds protesting budget cuts in the Andean province of San Juan took over a hospital over the weekend, the latest in ongoing street demonstrations, lending weight to President Eduardo Duhalde's claim that further cuts could spark more riots like those in December that left 27 dead.

Financial leaders from around the world gathered at an IMF conference in Washington on Sunday urged Argentina to end decades of runaway spending that many say has helped land it in a chaotic recession now well into its fourth year.

The IMF has refused to provide aid until cuts are made in the provinces, which private economists deride as the worst offenders in a country awash with corruption and excess.

Government spokesman Eduardo Amadeo said Duhalde had come up with a "15-day plan to solve the problems with the provinces'' but then quickly insisted there was not much room left to cut from budgets amid a four-year recession.

"We're not going to face this crisis by making cuts,'' said Amadeo.

Meanwhile, lines snaked around cash machines, supermarkets and gas stations, as Argentines braced for this week's indefinite closure of banks due to a run on deposits.

"I've been walking around the city for three hours trying to find a cash machine that's not empty,'' said Susana, a 28-year-old pediatrician.

A delay in reaching an IMF deal has come amid a steady bleeding of deposits from Argentine banks, forcing the central bank Friday to declare an indefinite suspension of banking and foreign-exchange activity that began Monday.

The suspension is widely expected to last until Congress approves a bill converting a huge chunk of bank deposits into government bonds. Approval of the plan, intended to avoid a wholesale collapse of the financial system, could come by midweek, according to legislative sources.

Amadeo said the government would try to strengthen banks by making unspecified reforms to the Central Bank's charter and merging several state-owned banks, but it was clear the government's economic plan depends mainly on getting IMF aid.

"I don't have a Plan B because the only plan is to solve our problems and get help from the IMF,'' Duhalde said in comments published Sunday in daily La Nacion.

The deposits conversion and uncertainty over when banks will be open again stoked the anger of Argentines, already weary from a traumatic currency devaluation, debt default and unemployment soaring over 20 percent.

Most observers inside and outside of Argentina believe no final IMF deal will be reached until Duhalde, the country's fifth president since December's deadly riots, can convince the provinces' powerful governors to rein in their budgets.

"I know that the governors are making an enormous effort,'' Duhalde said Saturday. "They are reducing spending and they've done everything they could.''

The IMF's policy-setting International Monetary and Financial Committee, in a post-meeting statement Saturday, urged the Argentine government "to move quickly to reach agreement on a sustainable economic program."