In the last two years, Argentina has reduced its inflation from an annualized rate of more than 1,000 percent to 60 percent, cut government spending and halted the outflow of savings -- commonly called flight capital.

The country registered 5.5 percent economic growth last year, and its economy is expected to grow again this year.

But the country's exports suffered last year -- in part the result of low grain prices and difficulty in generating increases in nontraditional exports.

President Raul Alfonsin has said that he wants to open up the highly protected private sector and "privatize" parts of the large state-controlled sector that is not only inefficient but a drain on the strained federal purse.

Argentina was hit by a severe recession in the early 1980s and another in the aftermath of the anti-inflation "Austral Plan" that Alfonsin launched in June 1985.

As a result, the Argentine economy has enough spare industrial capacity to grow for a while. But the need to service its debt inhibits its ability to modernize and expand facilities.

Citibank executive William R. Rhodes said recently that Argentina's "major problem is that it has had virtually no productive private-sector investment in years."

He said a new $1.9 billion commercial bank loan, coupled with $1.4 billion from the International Monetary Fund and hundreds of millions from the World Bank, should help boost investment spending in Argentina, the region's third biggest debtor.

Although it has reduced its budget deficit, Argentina's federal government has had difficulty controlling government spending because the provincial governments have autonomy to borrow funds from regional banks that must be reimbursed by the central government in Buenos Aires.