Argentina Abandons Savings Conversion Plan

Argentina has dropped plans to turn frozen savings into bonds and is exploring other ways to avoid the meltdown of its banking system, government officials said Sunday.

“We are going to wait a few more days. [Economy] Minister [Roberto] Lavagna has halted the negotiations to find alternatives,” presidential spokesman Eduardo Amadeo told local radio.

Depositors have protested almost daily against the proposed conversion of their savings into bonds, but Lavagna said at a news briefing late Sunday that banks had been functioning better in the last two weeks. He did not take questions.

“Our objectives are to provide maximum flexibility for the future use of savings and create conditions to make banks safe and attractive for savers so we can once again have a normal banking system,” Lavagna said. “This will take a few more days.”

The Argentine government, however, is due to repay about $800 million to the World Bank in the coming days--a payment analysts say could be hard to meet without an outside loan or dipping into depleted central bank reserves. But Lavagna has said it would be authorized by tonight.

Defaulting on multilateral loans could cut off one of the government’s last remaining outside sources of cash, which has been suspended since December when the International Monetary Fund halted payments because of a litany of broken Argentine promises to curb public overspending.

Lavagna, the sixth economy minister in just more than a year, predicted the Inter-American Development Bank would approve $700 million today for much-needed social programs.