Two months ago, Argentine President Raul Alfonsin stood Argentine politics on its head. He told the country the truth about its economic policies.

It was not foreign bankers or Argentina's $48 billion in foreign debt that was the root cause of the country's hyperinflation and economic stagnation -- a popular political theme during the first 15 months of his administration.

Instead, he said, Argentina itself and decades of its economic policies were the fundamental source of the country's economic woes.

It was an amazing change of course for the president, who inherited an economic mess in December 1983 from an eight-year-old military government. But to the surprise of veteran observers, most Argentines rallied around Alfonsin's message and the painful prescriptions he administered, boosting his popularity by 10 percentage points.

Last Thursday, labor unions organized a large, one-day strike to protest the new policy, but the demonstration was at best only partially successful and not an indication of a significant loss of support, Alfonsin's supporters and critics agree.

The clock is running on Alfonsin, however, many of these political figures say. If he fails to find the resources to begin to restore the ravaged Argentine economy, his mandate -- and the country's economic future -- will be in jeopardy.

The problems begin with the $48 billion Argentina owes to foreign creditors, which is soon to grow to $53 billion. Just to pay the interest on that debt, Argentina will have to drain about $5.5 billion a year from its economy -- an amount equal to 8 percent of its total output of $70 billion.

As great a burden as the debt, perhaps, is the memory of how little Argentina got in return. Little of Argentina's borrowings were used to modernize or expand industry or create new businesses aimed at exports. Argentine's military government, which took the country into a disastrous war against Britain, spent heavily for its own needs, and to dampen import prices and inflation, the government kept the peso highly overvalued in the early 1980s. But this fed the demand for dollars, as Argentine investors increasingly moved into the American currency to protect themselves from an inevitable fall in the peso's value.

In 1980, according to economist Jorge Dominguez, Argentina borrowed billions of dollars merely to have enough of them in the central bank to satisfy private citizens' demands. Rather than investing in their own country, Argentines shipped their dollars to safer havens abroad. In 1980 alone, nearly $12 billion was sent out of the country, and today, Argentines hold an estimated $25 billion to $35 billion abroad.

Because it neglected its own development, Argentina will need major financial contributions from abroad for several years if it is to meet its interest payments, create jobs and start new export-oriented industries.

For this help, Argentina is dependent upon its bank lenders, who hold about $25 billion of the total debt. Many Argentines were galled by the willingness of the banks to lend to the former military government because, it is said, the banks knew the government was doing little productive with the borrowings. Now the banks hold the lifeline. In the next several months, they are expected to provide fresh money totaling $4.2 billion, the first new bank loans Argentina has received in more than three years. But the banks are reluctant to make big new loans to Argentina, or any other major debtors, because of the huge amount of loans already outstanding (about $350 billion for all of Latin America).

Argentine officials say they are confident that once the country demonstrates it has inflation under control and has taken other sound steps, foreign funds will become available -- not only from banks but from the foreign holdings of Argentine citizens.

"But we have to get our economic house in order" before turning to the outside for more help, according to Treasury Secretary Mario Brodersohn, a key architect of the new plan that Alfonsin announced June 14.

That plan began with a wage-price freeze that Alfonsin imposed to break an entrenched inflationary psychology that was pushing prices upward at a 1,300 percent annual rate in May. He promised to cut the bloated federal deficit and ordered a halt to the printing of new money -- the principal means Argentine governments have used for decades to pay for their government. To underscore the break with inflationary practices, he created a new currency -- the austral -- to replace the vilified peso.

Argentina also made peace with its international lenders and the International Monetary Fund, the lender of last resort.

The attack on inflation was the heart of Alfonsin's program. Spiraling upward and out of control, the price escalation was making normal economic decision-making virtually impossible. "By late May, the economy had ground to a halt," according to one diplomatic source.

"The situation we were living through was a desperate one. Argentines are clinging to this plan as though it were a lifesaver. It has been 40 years since they last had a feeling of stability," said Sen. Carlos Gomez Centurion, a member of the tiny Provincialist Party.

And the solution was desperate -- following Alfonsin's moves, the Argentine economy spun into an almost immediate recession. But the wage and price freeze is only a first step. Adolfo Canitrot, second in command at the Economy Ministry, said that the freeze will be maintained until society is convinced that inflation will not return.

But at some point, economic policy makers will have to devise a strategy to get Argentina growing without rekindling inflation and inflationary expectations, he said. Exactly how they will do that is not clear, even to them, Canitrot and Treasury Secretary Brodersohn said.

If the next phase of the anti-inflation program is to succeed, the government will have to gain control over the public-sector enterprises, more than 350 in all, which range from oil and electricity to appliance manufacturing. Many of them lose money and are a drain on the government's limited resources.

In direct opposition to the verities of Argentine tradition and, especially, those of his own Radical Party, Alfonsin said he would reduce the role of the state in industry, arguing that the private sector is more efficient than the public for most forms of enterprise.

These enterprises control more money than the president, one diplomatic source said. "The government now is attempting to put the bridle on the public-sector enterprises and to get the bit to fit in the mouths of the directors," the source said. "The government must get them to transmit the money they owe the treasury and get them to follow their own budget."

In the months ahead, the debt situation is manageable. This year, a $4 billion export surplus and the long-awaited money from the IMF and the banks will meet and exceed Argentina's need for foreign assistance. But by 1986, the growing load of foreign debt and anticipated difficulties in maintaining exports will begin to slow Argentina's growth. And by 1987, unless the international facts of life change, Argentina will be hit severely by foreign debt service.

Looking farther ahead, Alfonsin and Argentina face major obstacles in their attempt to restore Argentina to the healthy economic status it enjoyed prior to World War II, when it was one of the most prosperous nations in the world. In the last 10 years, manufacturing employment has declined 35 percent, while output has fallen 20 percent, according to Alberto Sojit, a Peronist economist who has been advising the Alfonsin administration. Workers with relatively high incomes have been forced into low-paying service jobs, reducing demand for such middle-income products as automobiles.

The prices of Argentina's exports -- mainly agricultural and other commodities -- have fallen sharply. About 80 percent of Argentina's exports are agricultural products, and it faces increasing difficulties in exporting to its historical markets such as Europe because European farm policy has been aimed at fostering and protecting products such as beef. In 1960, Argentina exported 1 million tons of beef a year. Today it exports about 250 thousand tons.

Most troubling, perhaps, is Argentina's lack of diversification. While Brazil, its neighbor and traditional Latin American rival, has built aggressive export industries, Argentina has been content to rely on traditional commodities and raw materials for nearly all of its exports. In the mid-1960s, Brazil and Argentina each exported about $1.5 billion worth of goods a year. Today, Argentina exports about $8 billion worth, while Brazil's exports are worth $27 billion.

Economist Dominguez said that Argentina must quickly look to joint ventures with foreign investors to develop industries to transform raw materials and raw commodities into higher-value intermediate goods. For example, Argentina should export beef products, not merely beef, he said.

Perhaps the key factor in Alfonsin's new economic policy is Alfonsin himself.

"He is a man of charisma who speaks clearly and is perceived to be decent," according to N. Charles Rowe, vice president of the Bank of Boston's large Argentine branch operation.

A rival Peronist politician said that, during the year and a half Alfonsin has been in office, his stature has magnified. "Not since Juan Peron do the Argentine people seem willing to put their trust in one politician," he said.

His prospects are aided by the severe divisions in the Peronist Party, conceded Diego Ramirez Guelar, one of the leading Peronist deputies and ranking minority members of the House Budget Committee.

For the last six months, the Peronist Party, called Justicialist, has been in a massive internal war pitting provincial interests against those of urban Buenos Aires. Many expect Alfonsin's 52 percent House majority to climb to 60 percent or higher after the November congressional elections.

To be sure, Alfonsin's desire to reshape the economy and downplay confrontation with foreign banks and multilateral institutions is not shared by the vast majority of his Radical party, which remains committed to a heavy state involvement in industry.

"But attitudes are changing," insisted Cesar Jaroslavsky, who heads the Radical bloc in the House, the more powerful of the two legislative bodies. "We inherited a monstrous state from the military. More than 50 percent of economic activity is in the hands of the state."

"Alfonsin came into power hoping to duplicate the successes the Radicals felt they were achieving the last time they governed in 1963," according to a top Argentine businessman, who spoke on condition that he not be identified.

"But Alfonsin, who has been in regular contact with heads of state all over the world, learned that those policies don't work any more. Certain industries, like utilities, will always be in the hands of the state. But others have no business being there, and Alfonsin apparently now believes that, too," the businessman said.

"Alfonsin has control of the government. Don't you doubt it. Things may take time. But if he wants them to get done, they will get done," said an Argentine bank executive, who also spoke on condition that he not be identified.

But Alfonsin well may exhaust all his political appeal if he conquers the inflation problem and comes up empty-handed on investment. "Argentines are grateful today," said an Alfonsin supporter. "Will they be grateful tomorrow?"

Even though declining real wages have been a fact of life in Argentina for a decade, actual unemployment has been low, averaging about 3.5 percent. However, the recession that followed the wage-price freeze has led to almost-unheard-of layoffs and job losses. "More than 5,000 of our 30,000 members have been laid off," said Ricardo Lamanna, a top official of the union of foremen in the metals industry. "It's worse in construction. We're in favor of fighting inflation, but gradually. A country that doesn't produce can't pay its debts."

Brodersohn warns that "making serious economic policy is not enough. There are three players in this game. We need help from the advanced countries. They have to stop subsidizing exports where they have no comparative advantage. The European subsidy on beef exceeds Argentina's cost of production.

"The international banking community not only must reduce the interest it charges on outstanding loans. It also must make available new lines of credit if we are to grow."

His warning is muted in the less-confrontational tones that are now used by the government in referring to the debt. There is a recognition that, no matter how tempting it may be to say "to hell with the debt," in reality, it costs more to confront than to pay. "To be another Nicaragua, isolated from the United States, is not a palatable option," said a former top Argentine diplomat.

Leading Argentine officials are beginning to realize that neither Europe nor Japan is going to open its domestic markets to Argentine exports and that the United States is becoming Argentina's most important ally. But even if the rhetoric about Argentina's foreign obligations has cooled, the debt never disappears from the horizon.

"The people at the IMF, the Federal Reserve and the United States Treasury tell us that, if the economic situation stabilizes and our accounts are more or less in order, there will be an increase in foreign investments and the policy of the banks will change. They tell us the banks will be more willing to lend," the Economy Ministry's Canitrot said. "I don't know how long we've got to wait. After one year or two years without results, the political pressures will build up."