in a televised speech outlined measures aimed at restoring confidence and avoiding default on debt repayments, saying the country could no longer pay market rates to finance its debt and would move to a zero deficit stance in the second half. Other savings would come from a "frontal attack" on tax evasion and the elimination of exemptions on its newly created 0.6% tax on bank withdrawals and deposits. He added that banks had agreed to support the government plan to pay salaries through the banking system. Salaries of state employees and pensions will be cut. The spending cuts, ordered by presidential decree, are aimed at eliminating the $1.5 bln deficit Argentina was permitted for the rest of the year under its loan agreement with the IMF, Cavallo said. Meanwhile, interbank "call money" rates rose to 35% from 20% on Tuesday. Analysts are saying there are signs that private-sector deposits may fall sharply. However, news of Cavallo's measures helped the MerVal stock index claw back some losses to close 2.23% lower at 339.36. Argentina's portion of the JP Morgan Emerging Markets Bond Index Plus showed the spread over US Treasuries widening 91 basis points to 1,293bps. Bond spreads in Brazil widened in sympathy by 62bps to 970bps, the Real fell below 2.6 to the dollar (down 10% for the month), but the Bovespa stock index reversed losses on news of Cavallo's measures and closed 1.78% higher.