Argentina today announced emergency measures to feed the poor and considered using troops in support roles to free up police facing rising unrest and protests over banking curbs.
US President Bush last night offered support to Latin America's third-largest economy through international financial institutions if it implements a "sound and sustainable" economic plan but added a warning.
"Shortcuts to reform only lead to more trouble," President Bush said in a speech at the Organization of American States. "Half measures will not halve the pain, only prolong it."
Argentine officials said President Eduardo Duhalde supported his country's free-market reforms between 1990 and 1996 but opposed continuing to peg the peso at par to the dollar since then. President Duhalde devalued the peso last week.
"The Argentine government absolutely agrees that growth based on consistent fiscal and monetary policies and integration with the world are the best tools for solving our economic crisis," President Duhalde's spokesman Mr Eduardo Amadeo said.
"It is in this way we have developed our talks with the IMF and we thank the US government for its predisposition to assist Argentina at this difficult time," Mr Amadeo said.
In a show of good faith, the International Monetary Fund agreed to delay, for one year, an Argentine loan repayment of $933 million due today.
With public anger flaring into violence, ministers debated using troops to guard frontiers and distribute humanitarian aid to free up civilian police to patrol streets.
They also launched plans to buy 350 million pesos worth of food - $250 million at the new official exchange rate - to feed the poor, who looted supermarkets last month, triggering riots that forced out the elected president and killed 27th.
The government issued a decree to create "an emergency food program, destined for the purchase of foodstuffs, to meet the urgent basic needs for the survival of the most vulnerable."
But the curbs on cash withdrawals aimed at avoiding a run on banks, which have enraged the middle class, were under threat in the courts. Deputy Economy Minister Mr Jorge Todesca warned the creaking financial system could collapse if the Supreme Court overturns the limits and a freeze on savings.
Underlining the delicate state of the financial system, the Central Bank stepped in to prop up the newly devalued peso again, just four days after it began floating freely on the foreign exchange market for the first time in a decade.