By LARRY ROHTER

BUENOS AIRES

THE day after Néstor Kirchner qualified for a presidential runoff vote here late last month, the stock market plunged more than 8 percent. Investors who had been
expecting a second round for a pair of more market-friendly candidates were disconcerted by the strength shown by Mr. Kirchner, the little-known Peronist
governor from Patagonia with the populist image.

Now, Mr. Kirchner, 53, is about to become president of this ravaged country, catapulted into power by the unexpected withdrawal on Wednesday of Carlos Saúl
Menem, Argentina's president during the 1990's. But on Thursday and Friday, the peso fell by a total of 5 percent against the dollar, reflecting the market's jitters
about Mr. Kirchner's warning that "I will not be prey for corporations" and his attack on "groups and sectors of economic power that benefited from unacceptable
privileges during the past decade."

When he takes office a week from today, Mr. Kirchner will inherit a situation that is alarming but nowhere near as desperate as it was a year ago. With the Argentine economy finally showing signs of bouncing back from the worst crisis in the country's history, the question on the minds of investors and economists is this: Will he make things better, or will he make them worse?

American companies have a significant stake in any recovery here: in recent years they have consistently supplied a fifth of Argentina's imports, which fell to $8.9
billion in 2002 from $20.3 billion in 2001, as a result of the economic collapse last year. They also accounted for a fifth of all foreign investment. In addition,
American banks, bondholders and pension funds are among the largest holders of the public debt on which Argentina defaulted in December 2001.

The challenges confronting Mr. Kirchner, whose administrative experience consists of 12 years as governor of a province of less than 200,000 people, are daunting. He must resolve disputes on compensating banks and utilities, force powerful provincial governors to reduce spending and begin negotiations on a standby agreement with the International Monetary Fund — all at once and all within a short time, without the benefit of a resounding election triumph.

"The timetable is important," said Rafael Ber of Argentine Research, a market analysis firm here. "He needs to get the economy growing again, and he is going to
have a short, short, short honeymoon — three months at the most. Everyone wants results in the shortest possible time."

The most pressing concern, of course, is the country's debt burden, which has risen to more than $170 billion, the equivalent of nearly 140 percent of gross domestic product, since a default was announced late in December 2001. A rollover agreement reached with the I.M.F. in January this year expires barely two months after Mr. Kirchner takes office, and the new administration is scheduled to pay about $9 billion back to multilateral lenders by year-end.

 
STILL, Argentina has already confounded pessimists who predicted that the country would collapse unless it moved quickly to reach an agreement with the I.M.F.
In fact, the economy is expected to expand 4 to 6 percent this year. Tax receipts are zooming, consumer confidence is up, and inflation has leveled off at less than 20 percent.

"The economy is remarkably stabilized," Anne O. Krueger, deputy director of the I.M.F. and one of Argentina's most implacable critics last year, said in an interview this month with La Tribune, a French financial newspaper. The interview has been widely cited by government officials here as proof that they were correct to resist the fund's demands for sharper spending cuts. "To the surprise of everyone, including myself," she said, "Argentina has returned to growth, without falling into hyperinflation."

But what does Mr. Kirchner plan to do? In the wake of his cruise to victory, market analysts here and abroad are trying to decipher his record and his campaign
talk. They have found some of it frankly alarming: he has hinted, for instance, that he might nationalize the country's railways and has also talked of repudiating that
part of the foreign debt he considers "illegitimate."

"We are not disposed to do everything to continue paying international creditors at the expense of the hunger of Argentines," Mr. Kirchner said in a meeting with the foreign news media here late last month. "We are going to insist on a considerable reduction in the debt and interest rates and a rescheduling" that will "allow
Argentina to rearrange its external accounts."

On the campaign trail, Mr. Kirchner has defined his economic philosophy as "neo Keynesian" without providing much in the way of specifics. But he has talked, of a huge public works effort to lift the country out of nearly five years of recession, led by a program to build three million new homes, which he says will create five
million jobs in a country where the unemployment rate has been running at record rates of more than 20 percent.

But most economists say it would be a mistake for the new government to try to spend its way back to growth and jeopardize the budget surpluses that the markets
and the I.M.F. expect. "You need to have saved during the boom to be able to spend in the troughs," said Juan Luis Bour, director of the Foundation for Latin
American Economic Research, based here. "But what happens when you start from a point where you're broke?"

As a candidate, Mr. Kirchner also declined to meet with an I.M.F. delegation, leaders of the country's main industrial federation and the United States ambassador
here. But now that he is about to take office, business leaders are predicting that the man who ran as a left-of-center populist will take a cue from Brazil's new
president, Luiz Inácio Lula da Silva.

"The difference from Menem is not going to be that great because the degree of freedom available to him as president is going to be limited," said Carlos Pérez,
executive director of Fundación Capital, an economic consulting firm here. "He is going to turn out being someone like Lula, who frightens people during the
campaign but, once victorious, begins to moderate his discourse and ends up being more Catholic than the pope."

One sign of continuity is Mr. Kirchner's indication that both the economy minister, Roberto Lavagna, and the Central Bank president, Alfonso Prat Gay, will be
retained in their posts. Both men are already in touch with the I.M.F. and other multilateral agencies as well as private creditors and have won their grudging respect
with fiscal and monetary policies that are considered to be prudent.

As governor of an oil-rich province, Mr. Kirchner has also shown himself to be a fairly canny money manager. When the state oil company was privatized in the
1990's, the provincehad a choice of becoming a shareholder in the new company or taking a cash payment. He chose stock and then watched as the shares the
province had obtained for less than $20 each rose to nearly $50, at which point he ordered the province to cash in. It earned a windfall of more than $500 million.

Then, rather than deposit those proceeds in an Argentine bank, he moved them abroad, fearing that in the crisis that everyone saw looming, the federal government
might try to seize the money. He was proved correct in December 2001, when bank accounts here were frozen and then converted from dollars into devalued
pesos. After Argentina defaulted on most of its $141 billion in public debt, he moved the money from the United States to Switzerland and Luxembourg to avoid
creditors in New York who were trying to get compensation.

 
BUT until Mr. Kirchner shows his cards and makes his peace with the I.M.F., foreign investors here prefer to keep a safe distance and remain silent. American
companies ranging from Johnson & Johnson and Dow Chemical to MetLife and Kimberly-Clark declined or did not respond to requests for interviews to discuss
prospects for the Argentine economy under his administration.

Since the default and subsequent currency devaluation late in 2001, foreign investment, which had been running as high as 4.5 percent of G.D.P. in the 1990's, has
virtually dried up. The only outside capital flowing into the country has come from bargain hunters making purchases at fire-sale prices: Canadian and South African
interests buying up gold mines, and Brazilian conglomerates acquiring the country's largest oil company and brewery.

In that meltdown, American companies may have been hurt less than their European competitors. French, Spanish and Italian companies in particular had invested
heavily in electricity, water, gas and telecommunications — all sectors that were hit especially hard by the devaluation of the peso and the government's refusal to
allow tariff increases to compensate for that change.

The financial sector was perhaps clobbered even more, thanks to the government's decision to convert debts and credits from dollars into pesos at significantly
different exchange rates. Big players like Citibank and Bank of Boston were affected. But a higher portion of American investment appears to have been channeled
into businesses related to agriculture, which rebounded quickly and accounted for most of Argentina's exports last year.

"It was a bumper year for them out there" in the countryside, said Jorge H. Forteza, a regional vice president for Booz Allen & Hamilton here, referring to wheat, soy and meat producers.

Some foreign companies that were already here have also moved to take advantage of idle capacity and the much lower labor costs brought on by the devaluation of the peso. I.B.M. has moved its Latin American telemarketing operations here from Miami and has also stepped up its software development locally.

 
THE recent growth, though, is mainly a result of domestic investment. Argentines are estimated to have sent more than $100 billion abroad before bank accounts
were frozen in December 2001 and to have placed an additional $30 billion under their mattresses, and some of that money is starting to trickle back into promising
economic areas like textiles, shoes, auto parts and the processing of dairy products.

"The beginning of the recovery was mainly driven by export-oriented sectors and import substitution activities," said Fernando Losada, an Argentina market analyst
at ABN Amro Bank in New York. "But fortunately that initial spark has passed over to the rest of the economy, and you are now beginning to see a more
generalized recovery."

Exporters want to keep their own momentum, however, and have been pressing the departing government to brake the strengthening of the peso, which before last
week's declines was up nearly 20 percent against the dollar this year. The exchange rate here at the end of last week was about 2.87 pesos to the dollar.

Because Mr. Kirchner is from a province that exports not just oil but also products like mutton, wool, fish and gold, analysts see him as sympathetic to a slightly
weaker peso.

Mr. Kirchner has also declared that his foreign policy will be one of "no automatic alignments." That means he is more enthusiastic about strengthening trade ties with fellow members of Mercosur, the South American common market, especially Brazil, than about seeking a bilateral agreement with the United States or joining
Washington's Free Trade Area of the Americas.

Even before taking office, Mr. Kirchner and other Argentine officials have begun preliminary talks with the Brazilian government about coordinating exchange rate
policies. The Argentine peso and the Brazilian real have been trading recently at roughly the same level in relation to the dollar, and officials hope to maintain them
within a fixed band as the first step toward creating a common Mercosur currency.

The first signals of Mr. Kirchner's direction will come this week, beginning with the naming of his cabinet, scheduled for tomorrow. The uncertainty will not last much longer than that, because the political chaos of the last 18 months has left those now in power eager to hand off the entire mess as quickly as possible to the fresh, but unfamiliar, new face from Patagonia.

"Kirchner could turn the country either way," Mr. Forteza said. "Yes, he is a gigantic unknown. But he is a gigantic promise as well."