Congress debated a crucial currency devaluation Saturday after getting fresh proof of the calamitous state of Argentina's finances — word that the budget deficit for 2001 will top $11 billion.

As late as November, the previous government was predicting a deficit of $7.8 billion — already well above the $6.5 billion target agreed upon with the International Monetary Fund last August in return for $8 billion in emergency aid.

Speaking on local radio, Cabinet Chief Jorge Capitanich said plummeting tax revenues from an economy in a tailspin were to blame.

The announcement came before Congress convened to debate a bill that would devalue the peso and give President Eduardo Duhalde and his government emergency powers to rebuild the economy's shattered foundations.

Other countries have become concerned as the crisis has begun to affect foreign businesses, including U.S. banks. On Saturday, President Bush called the leaders of Mexico and Uruguay to discuss Argentina, the president's aides said. They provided no details.

On Friday, two days after taking office as Argentina's fifth president in less than two weeks, Duhalde sent the bill to Congress, asking for special powers to ease the peso's decade-old parity with the U.S. dollar, reform the banking system, steer prices and protect Argentine industry.

Although few details of the plan have been confirmed, Duhalde is said to be counting on using citizens' hard currency savings to temporarily bolster Argentina's bankrupt accounts.

He also wants to protect small-time debtors by converting loans up to $100,000 into pesos.

Declaring a "public emergency in economic, financial and exchange rate" policies, the bill aims to "create conditions for sustainable economic growth" that will allow the government to renegotiate Argentina's staggering $141 billion debt.

Mired in nearly four years of bitter recession, Argentina last week defaulted, missing a $28 million payment on a foreign bond for the first time.

The first drafts of the bill gave no details on when or how the peso — pegged at one-to-one to the dollar since 1991 — would be devalued, but Duhalde confirmed Friday that a devaluation was imminent.

Capitanich said Friday the devaluation could be around 40 percent.

The plan, penned by Economy Minister Jorge Remes Lenicov, is also said to include a tricky dual exchange rate that was widely criticized by economists.

"In the past, these policies of multiple exchange rates and price controls have never worked," said Fernando Losada, Latin American economist at ABN-Amro in New York.

"But in fact, there's no such thing as a plan yet, until they give us a clue on what they will do with fiscal policy," Losada said. He said the government's budget proposal would be "crucial."

With an $11 billion hole in the accounts, balancing the budget will likely be impossible without assistance from the IMF, which cut off Argentina's funding Dec. 5 after the previous government failed to deliver on balanced budget promises.

Under the plan, the peso would be fixed at about 1.30 or 1.40 to the dollar for business and trade, while individual Argentines would have to pay a free-market rate for hard cash.

Many Argentines fear a return of the currency chaos and hyperinflation of the 1980s, when money changers stood on nearly every street corner with handfuls of greenbacks, earning them the nickname "arbolitos," or little trees.

Many businesses already were hiking prices to cover an expected jump in import costs. Appliance stores, pharmacies and supermarkets raised prices as much as 20 percent, while some bakeries hiked bread prices by nearly a third, media reported.

The new government, backed by the industrialists, says a devaluation is the only way to drag Argentina back from the brink of collapse.

But the complex mechanisms it will involve have left Argentines confused. Analysts warn that Duhalde must be careful not to impose unpopular measures or he could face renewed street riots like the ones that ousted the last elected President Fernando de la Rua.