Argentina stops payment on foreign debt

Moments after being sworn in as Argentina's interim leader Sunday, Adolfo Rodriguez Saa announced a drastic move to try to address the country's desperate economic woes.

• BACKGROUND: Argentina in crisis

The new president said foreign debt and interest payments would be suspended a measure economists said could lead to the biggest financial default by a government in the world's history.

"Let's take the bull by the horns. We are going to talk about the foreign debt," he said during his inaugural address. "The Argentine state will suspend the payment of the foreign debt."

Rodriguez Saa, a Peronist, replaces centrist Fernando de la Rua, who was forced from office last week after two days of widespread violence and looting by Argentines furious over economic hardships.

A joint session of congress debated all night before voting to appoint Rodriguez Saa to the interim president post.

Much of the debate was over how long he would serve before new elections would be held to select a president to complete the remaining two years of de la Rua's four-year term. That vote will be held March 3.

Rather than wait for a midday swearing-in, Rodriguez Saa took the oath of office immediately.

The members of congress also spent a lot of time Saturday night attempting to lay blame for the economic crisis and social unrest.

More than two dozen people were killed and 200 injured in violence last week.

Argentina groans under a four-year recession that has driven unemployment to more than 18 per cent, and the public debt to $132 billion.

Rodriguez Saa promised to get immediately to work on the economic problems, and kept his word with Sunday's announcement.

Aside from the moratorium on debt repayment, he has vowed to keep the Argentine peso pegged to the U.S. dollar, despite increasing warnings from economists and political leaders that the economy won't recover without a devaluation of the currency.

Rather than devalue the peso, Rodriguez Saa said he would introduce a second currency to "inject liquidity" into the economy and to put more money into ordinary Argentines' pockets. He did not elaborate on how the plan will work.