(Adds quotes from debate)
By Hugh Bronstein
BUENOS AIRES, Nov 15 (Reuters) - Argentina's ruling-party presidential candidate, Daniel Scioli, lagging in opinion polls, came out swinging in Sunday's debate against his business-friendly rival, but switched to defense when confronted by the incumbent government's record.
Scioli, the governor of Buenos Aires province, has been endorsed by President Cristina Fernandez. Barred from running for a third term this year, Fernandez will leave her successor to deal with double-digit inflation, scant central bank reserves and a widening fiscal deficit.
Scioli's opponent in the Nov. 22 election is Mauricio Macri, a free-markets proponent leading the polls by about 8 percentage points after a stronger-than-expected performance in last month's first round of voting.
"His policies are a danger for our society," Scioli said at the open of the televised debate at a Buenos Aires university. "Who would pay the price of the fiscal adjustment that would come from the sharp currency devaluation he wants?
"Who will pay the price of lifting subsidies? Families need to know how they will pay their light, gas and transportation bills," Scioli said.
Macri struck back with a litany of complaints about Fernandez's stewardship of Latin America's third-biggest economy, starting with official growth, inflation and poverty data long discarded by private economists as fudged.
The Argentine peso closed at 15 to the U.S. dollar in black market trade on Friday, far weaker than the official 9.6 pesos to the greenback, a rate that is propped up by central bank interventions in the foreign exchange market.
"Argentina's problem is not the dollar. It is a government that does not stop lying and has destroyed confidence in our country, which is why there's no investment or growth. Inflation has diluted the income of our retirees and our work force," Macri said.
He promises to spur investment by quickly dismantling Fernandez's trade and currency controls. Scioli's message of gradual change toward more orthodox policies while preserving Fernandez's generous welfare programs has failed to catch fire with middle-class swing voters who will decide the election.
The jury was out as to whether Sunday's debate would swing many votes.
"This debate was certainly an inflection point, but it came at a time when Macri has the momentum," said local pollster Mariel Fornoni.
Macri said he would seek Venezuela's suspension from the Mercosur trade bloc because of the jailing of some political opponents by President Nicolas Maduro's socialist government, and asked Scioli to make the same commitment. Scioli ducked the question.
Both said they would confront the rising problem of narcotics trafficking. Argentina has become a shipping point for Bolivian and Peruvian cocaine on its way to Africa and then north to the lucrative markets of Europe.
"Narcotics trafficking has rotated into our territory," Scioli said, calling for zero tolerance of illegal drugs. "But when there is fiscal adjustment and the destruction of employment, it increases inequalities that promote violence."
He said his ample welfare policies would do a better job of guaranteeing security.
"We have to confront drug trafficking after 10 years of government inaction," Macri jabbed back. "We have to work together with countries that are fighting the disgrace that is the narcotics trade." (Additional reporting by Richard Lough; Editing by Leslie Adler and Nick Zieminski)