BUENOS AIRES -- A year ago, Argentina seemed to have halted more than a decade of triple-digit inflation and appeared poised to tackle the economic stagnation that had plagued it for more than half a century.

Today, however, soaring public deficits have sent inflation above 100 percent again and the economy once again is mired in a recession.

Foreign bankers, meanwhile, warn that unless President Raul Alfonsin makes significant progress in opening up the economy within the next year, they might stop lending to Argentina, even though this would almost certainly cause the country to declare a debt moratorium.

In Washington, U.S. officials are growing increasingly worried about the prospect that Argentina will follow Brazil as the next big Latin debtor to suspend payment on its debt to banks.

In the past several weeks, Argentina has risen to the top of the list of trouble spots in the debt crisis, which has recently taken some other turns for the worse. On Friday, Moody's Investor Services downgraded the bond ratings of Argentina, Brazil and Venezuela, and placed under review for possible downgrading the ratings of 12 banks because of their loans to less-developed countries.

Alfonsin seems to have few options available to halt the country's downward slide. Government coffers are nearly empty and his Radical Party was defeated in September's midterm elections by the rival Peronist Party.

Economists agree that Alfonsin, who ushered in a return to democracy in 1983, has to reverse a 40-year habit of heavy state intervention in the economy. Economists blame this tradition for turning what was the world's sixth wealthiest country 60 years ago into an underdeveloped nation with an unbearable foreign debt.

But government moves to deregulate the economy face powerful opposition. Businessmen oppose the elimination of the many government subsidies they enjoy, and the country's powerful labor federation, the General Confederation of Labor (CGT), fears that deregulation would increase unemployment among its membership.

Argentina's future seemed much brighter back in June 1985, when Alfonsin launched the Austral Plan, which imposed stiff wage and price controls in a bid to end an inflation rate running at more than 1,000 percent annually. The Austral Plan seemed to have tamed the inflation beast, and Alfonsin's popularity jumped.

But Alfonsin stumbled when the CGT and major business groups blocked his plans to privatize many state enterprises, gradually reduce high tariffs, remove import barriers and deregulate much of the rest of the economy.

Then in 1987, the public sector deficit climbed as the government relaxed controls on state spending in an effort to win September's elections. As the public sector rose, so did inflation, increasing 11.7 percent in September and 19.5 percent in October.

In mid-October, Alfonsin responded by imposing a package of austerity measures designed to rein in inflation and restore investors' confidence in the economy. The program froze wages and prices, devalued the the austral 11.8 percent, established a free-market exchange rate for financial transactions and freed interest rates from government ceilings. Alfonsin also raised prices for gasoline and an assortment of public services, and asked Congress to raise taxes by $3.5 billion.

Foreign diplomats, bankers and economists say the success of Alfonsin's latest anti-inflation plan depends on his ability to achieve two goals that have eluded him thus far: overcoming business and labor opposition to opening up the inefficient and uncompetitive economy, and reducing the public sector budget deficit, estimated at 8 percent of gross domestic product.

Argentines are already feeling October's austerity moves. A business group has reported that sales for a wide variety of products dropped 30 to 50 percent in November from September's levels.

"Nobody has any purchasing power," said Inez La Roca, a salesperson at an appliance shop in downtown Buenos Aires where sales were off 40 percent.

To express its displeasure with the decline in real wages, the CGT has called a 34-hour national strike for Tuesday and Wednesday.

The CGT's muscle -- it has more than four million members -- is a major reason why Alfonsin has resisted advice that the key to promoting noninflationary growth is laying off thousands of government workers deemed unneeded and privatizing many of the more than 300 state companies.

Losses from the eight largest government companies -- which include railroads, oil and telephones -- account for 85 percent of the public sector deficit. If Alfonsin were able to achieve the difficult task of letting go state workers, economists say they would not easily find other jobs, as investment has declined to one of the lowest rates of this century.

In early November, government officials announced a modest attempt to increase competition in the economy. They will allow private companies to invest in sectors previously reserved for state enterprises.

While businessmen criticize the government for not taking more dramatic action, Treasury Secretary Mario Brodersohn says the administration is making changes as quickly as political conditions will allow.

Washington Post staff writer Paul Blustein contributed to this story.