WITH national elections less than two months away, Argentine President Ra'ul Alfons'in is struggling to keep afloat an economy weighed down by high inflation, a weakening currency, and one of the world's largest foreign debts. Aware of the threat the $58 billion debt poses to stability, officials and bankers here have welcomed United States Treasury Secretary Nicholas Brady's new plan of debt relief for third-world countries. But they worry that because of election-time uncertainties, Argentina will be out of the running for the plan's benefits in the foreseeable future.
``This is a very important step forward,'' says Deputy Economy Minister Mario Brodersohn with enthusiasm. ``It marks a breakthrough, and I am only sorry this government will not be able to take advantage of it. We have been insisting on the need for debt relief for five years now.''
Officials with Argentina's creditor banks are equally gladdened by the move.
``The only sensible reaction is hopeful expectation,'' says Charles Rowe, a senior official at the Bank of Boston. ``The powers that be are acknowledging the seriousness of the situation, and that there is really no solution on the present basis.''
The country has not repaid any capital on its commercial debt since 1978, and a year ago it stopped paying interest, too. By the end of this year, according to one creditor bank's figures, Buenos Aires will be $5.3 billion behind in interest payments to its commercial lenders.
The Central Bank stopped paying interest when a deal with the International Monetary Fund (IMF) went sour after only a few months in early 1988. The IMF suspended a $1.2 billion loan after Argentina did not meet the economic performance conditions on which the loan was based.
And there, for Argentina, is the rub of the Brady plan: If the IMF puts up the money with which Argentina can buy back some of its debt at a discount, as the plan suggests, the international lender is going to insist on the very austerity measures that the government has always resisted because of their social cost.
This element of the plan led the powerful trade union confederation to immediately reject the proposals as ``a disguise for a new plan which will mean increased suffering for the debtor peoples.''
THOUGH details of the Brady plan are still unclear, there is no doubt the proposals will apply only to countries prepared to put their house in order along the IMF's usual belt-tightening lines.
In Argentina, that will mean increasing the prices of public utilities, eliminating government subsidies, selling off inefficient state-owned monopolies, and unifying the three-tiered foreign exchange rate. The immediate impact of such moves would be higher prices and fewer jobs, an explosive mixture as Venezuelan President Carlos Andr'es P'erez discovered when he began implementing an IMF austerity package late last month, triggering riots in which hundreds died.
President Alfons'in is clearly not about to risk such an outbreak at this time. But even after the May 14 polls, the country seems unlikely to be in a position to make hard economic choices.
Whether the next president is ruling Radical Party candidate Eduardo Angeloz, who has been warning of the need for painful structural reforms in the economy, or Peronist front-runner Carlos Menem, who has been ambivalent, he will not take office until Dec. 10. So, for seven months, a lame-duck government will finish out its term.
``Nineteen eighty-nine is not a year for structural reform in Argentina,'' says Juan Luis Bour, head of a pro-business think tank. ``Only when the new government takes over will we be able to think about how Argentina will make the changes needed,'' if it is to join in the Brady plan.
In the meantime, Argentine eyes will be fixed on Venezuela and Mexico, two Latin countries with new governments and ongoing negotiations with the IMF, that are likely to be test cases for the Brady plan.
``The problem is that all the details are missing, still,'' says a senior Economy Ministry official. ``How it is implemented is as important as the plan itself. The good thing about Brady's plan is what he has said; the bad thing is what he hasn't said yet.''
How the plan works out will also have considerable bearing on how commercial banks react to it, says an official at one of Argentina's biggest creditor banks.
``The Brady plan offers fresh money to debtors. It offers conditionality governing that money, and it offers debt relief,'' says the official. ``The banks have always wanted the first two components, but we don't yet know what weight they will have in the plan, and what weight the relief component will have.''
The Brady plan already offers one advantage, says think- tank chief Bour. For a year, since its IMF agreement collapsed, Argentina has been locked out of the international financial system for failing to repay its commercial creditors, he points out. ``So for Argentina, any global approach to the debt problem, like Brady's, has to be positive and welcome,'' Bour says, ``because it offers the country a way back in, a way back to the negotiating table.''