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700 | <s>[INST] Today, I earn $7,000 a month, [/INST] but I can't have what I used to have". </s> |
701 | <s>[INST] "To think you can live with hyperinflation [/INST] is to think you can live with cancer," says economist Adalberto Rodriguez Giavarini. </s> |
702 | <s>[INST] But few believe Argentina can [/INST] durably live with current price and cost levels either. </s> |
703 | <s>[INST] So, as the initial euphoria of stability wears off, Argentina faces a crucial test: [/INST] It must either reduce costs through better productivity -- which could cause unemployment and heighten social tensions -- or face the unenviable decision to devalue its currency. </s> |
704 | <s>[INST] As with Mexico and Venezuela, where social tensions are [/INST] rising despite impressive economic gains, the Argentine experience serves as both a beacon and a warning light. </s> |
705 | <s>[INST] Stability is bringing important benefits such as low inflation and steady growth, but [/INST] at a high cost: Industrial unemployment is rising, a trade deficit has replaced a trade surplus, and corporate profitability is declining amid tougher global competition. </s> |
706 | <s>[INST] Polls suggest President Carlos Menem's Peronist Party will [/INST] post a strong win in October's legislative elections on the strength of its economic record. </s> |
707 | <s>[INST] For some, such as 49-year-old high-school principal Carmen Rodriguez, the end of hyperinflation [/INST] means previously unaffordable goods are now within reach -- thanks in part to the opening of the economy to imported goods and foreign competition. </s> |
708 | <s>[INST] On a Saturday afternoon, she is standing with her husband [/INST] in front of an electronics store, shopping for stereo equipment -- and enjoying her newfound spending power. </s> |
709 | <s>[INST] Though prices used to rise faster than [/INST] her salary, "you don't have to run so fast" today, she says. </s> |
710 | <s>[INST] "You can save to buy later, and [/INST] the price is the same the day you want to buy something". </s> |
711 | <s>[INST] She says all Argentines [/INST] are learning to live by new rules. </s> |
712 | <s>[INST] Part of her shopping spree [/INST] was financed by the couple's monthly $1,500 income. </s> |
713 | <s>[INST] Mrs. Rodriguez is buying things that will last, and [/INST] scorns those who complain even as they blow money on pricey restaurants and country clubs. </s> |
714 | <s>[INST] "We have to learn how to [/INST] eat, live, organize our households all over again," she says. </s> |
715 | <s>[INST] But some find it [/INST] harder to cope with Argentina's hardened cash. </s> |
716 | <s>[INST] Like the economy, businessman Hugo [/INST] Cosentino is still going through his own painful adjustment. </s> |
717 | <s>[INST] The imports that delight consumers like [/INST] Mrs. Rodriguez brought his cardboard-packaging company to its knees. </s> |
718 | <s>[INST] For a time, Mr. Cosentino, 44, did [/INST] well by passing on price increases before his costs went up. </s> |
719 | <s>[INST] "You'd say `My costs are 10, I'd like [/INST] to earn 15% on that, so to be sure, I'll charge 20,'" he says. </s> |
720 | <s>[INST] I turned my profits into dollars or goods: I had [/INST] a big apartment in La Recoleta a tony district, an apartment in Villa Gesell a beach resort. </s> |
721 | <s>[INST] But the arrival of true hyperinflation [/INST] in 1989 meant his costs moved faster than he could. </s> |
722 | <s>[INST] "By the time we got paid 45 days [/INST] later, the money didn't cover half our costs for raw material," he says. </s> |
723 | <s>[INST] The coup de grace came with [/INST] stability, when the government opened Argentina's economy to foreign competition. </s> |
724 | <s>[INST] "My clients would show [/INST] me the faxes from Brazil," he says. </s> |
725 | <s>[INST] He sold his apartments and one car [/INST] to pay off the roughly 30 workers he had to fire. </s> |
726 | <s>[INST] "I lost my company, my wife, my friends, because [/INST] I was now a second-class citizen who couldn't afford to eat in the country club," he says. </s> |
727 | <s>[INST] He earns $2,000 a month, [/INST] but says that doesn't cover his expenses. </s> |
728 | <s>[INST] Of course, stability, like inflation, produces [/INST] both winners and losers, says Pedro Lacoste, a business consultant. </s> |
729 | <s>[INST] A typical day used to mean [/INST] answering 30 calls from clients worried about exchange or interest rates. </s> |
730 | <s>[INST] Now, "the phone rings only four or [/INST] five times a day, but it's to talk about 10-year plans". </s> |
731 | <s>[INST] I have to learn a [/INST] lot of new things, but I feel fulfilled". </s> |
732 | <s>[INST] Mr. Lacoste, who is 35 and single, [/INST] has maintained his income, but only because he is working much harder. </s> |
733 | <s>[INST] He also has fired one of [/INST] his three secretaries, as well as some administrative staff. </s> |
734 | <s>[INST] "It's today's situation that's normal, not yesterday's," he [/INST] says, noting how friends have had to cut back on their two-maid, three-country-club existence. </s> |
735 | <s>[INST] "It's a painful adjustment, but it's part [/INST] of Argentina learning it's not as rich a country as it thought". </s> |
736 | <s>[INST] People are getting squeezed by higher [/INST] taxes and utility bills, while subsidies and wages are curbed. </s> |
737 | <s>[INST] "With hyperinflation, you asked for [/INST] raises and got them," says Leonor Gherscovici. </s> |
738 | <s>[INST] "Today there is stability [/INST] in prices, but stability in wages, too". </s> |
739 | <s>[INST] Mrs. Gherscovici, 31, earns $300 [/INST] a month working part-time in a law firm. </s> |
740 | <s>[INST] Tacked to her refrigerator are unpaid bills [/INST] for gas, the phone and municipal housing tax, totaling about $187. </s> |
741 | <s>[INST] She also owes about $1,100 [/INST] on her credit card, most of it for food. </s> |
742 | <s>[INST] "Everything we earn goes [/INST] to taxes and basic necessities," she says. </s> |
743 | <s>[INST] Still, she says, echoing the feelings of most [/INST] Argentines, "I'd rather be like today without money, than like before with all that craziness. </s> |
744 | <s>[INST] But what I really would [/INST] want," she adds, "is stability and money". </s> |
745 | <s>[INST] ___ Document 264 of 400 The Americas: Argentina's supply-side blueprint for [/INST] growth Author: Cavallo, Domingo F Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 23 July 1993: PAGE A7. </s> |
746 | <s>[INST] accountid=28034 Abstract: Domingo F. Cavallo offers an analysis of Argentina's fiscal, external and relative prices [/INST] policies, saying that the country's major economic challenge is to increase domestic savings so that they are not replaced by external savings in the country's economic equation. </s> |
747 | <s>[INST] Economists have shifted from placing excessive emphasis [/INST] on short-term aggregate demand considerations to focusing more on trends in medium-term productivity. </s> |
748 | <s>[INST] While continuing to be mindful of developments in fiscal policy and [/INST] the balance of payments, economists have learned that the true economic revolution can be found on the supply side. </s> |
749 | <s>[INST] Since April 1991, a considerable number of [/INST] institutional, fiscal and monetary reforms have embodied this focus on the supply side. </s> |
750 | <s>[INST] From the monetary standpoint, the Central Bank now operates a currency [/INST] board: the exchange rate is pegged to the U.S. dollar (by law), and the monetary base is fully backed by reserves. </s> |
751 | <s>[INST] In keeping with this dollar [/INST] standard, monetary policy plays a passive role. </s> |
752 | <s>[INST] The Central Bank can only adjust the monetary base in order to buy [/INST] or sell international reserves, and the possibility of issuing currency to finance government expenditures or to extend credit to the private sector has been eliminated. </s> |
753 | <s>[INST] For its part, fiscal policy has [/INST] succeeded in consolidating stability through a permanent budget surplus. </s> |
754 | <s>[INST] Increasing the collection of some of the more neutral taxes, such [/INST] as the value added tax, has made it possible to eliminate a wide array of taxes that distort incentives. </s> |
755 | <s>[INST] Not only has Congress returned to the sound practice of giving timely approval [/INST] to the national budget, but it has incorporated a simple principle which had, for all intents and purposes, been forgotten: balancing revenue with expenditure. </s> |
756 | <s>[INST] Now, laws calling for increased expenditure [/INST] cannot be passed without concurrently negotiating the resources to finance them. </s> |
757 | <s>[INST] As for structural and institutional reforms, considerable progress has been made in a [/INST] very short period of time in restructuring and privatizing state enterprises, deregulating the manufacturing and service sectors, liberalizing trade and deregulating capital markets. </s> |
758 | <s>[INST] The reform program is now moving on [/INST] to the privatization of social security and to labor market reform. </s> |
759 | <s>[INST] Argentina's economic history bears the marks of so much economic failure [/INST] and frustration that a thorough evaluation of the developments occurring in fiscal, external, and relative price matters is always enlightening. </s> |
760 | <s>[INST] However, these factors should be evaluated with our emphasis [/INST] on unabashedly increasing aggregate supply by revitalizing the entrepreneurial vigor of all sectors of the economy. </s> |
761 | <s>[INST] Relative prices: For the past two years, wholesale inflation has not [/INST] been higher in Argentina than in the U.S., and has shown potential to reach negative levels (i.e., deflation), during some months. </s> |
762 | <s>[INST] The growth rate in consumer prices has [/INST] also declined, although not yet to the levels in developed countries. </s> |
763 | <s>[INST] For the first time in 20 years, however, [/INST] a single-digit figure for the cumulative annual price increase seems to be a reality. </s> |
764 | <s>[INST] Capital inflows: While the Government continues to pay special attention to [/INST] ensuring foreign exchange convertibility in its purest form, the inflow of capital will continue to determine the current account balance. </s> |
765 | <s>[INST] In turn, the inflow of capital is determined [/INST] by (a) domestic policies and the results they obtain; and (b) the international economic situation. </s> |
766 | <s>[INST] Trade policy: Argentina now has [/INST] one of the most open economies in the world. </s> |
767 | <s>[INST] Between 1989 and 1992, we dramatically reduced the level [/INST] and variance of tariffs and eliminated non-tariff barriers to imports and taxes on traditional exports. </s> |
768 | <s>[INST] This process of liberalization was undertaken on a unilateral basis -- i.e., Argentina [/INST] did not base its policy on the reciprocity that could have been obtained by waiting to negotiate within the Uruguay Round or through bilateral negotiations. </s> |
769 | <s>[INST] Our government will not hesitate to retaliate in [/INST] cases of dumping or pervasive export subsidization on the part of other countries. </s> |
770 | <s>[INST] The quotas recently applied to imports of a few paper products [/INST] are in full compliance with GATT rules and reflect our strong determination to defend our industry from foreign competition. </s> |
771 | <s>[INST] In other words, these recent actions [/INST] should not be interpreted as a departure from previous trade policies. </s> |
772 | <s>[INST] External sector: Contrary to what some [/INST] observers assume, the Argentine external sector is very strong. </s> |
773 | <s>[INST] The current account deficit of the balance of [/INST] payments represents 2.8% of GDP, compared with 3.2% in Chile and 7.1% in Mexico. </s> |
774 | <s>[INST] Our external debt is equivalent to 25% [/INST] of gross domestic product, also a smaller ratio than in Chile or Mexico. </s> |
775 | <s>[INST] The only indicator that is less [/INST] favorable than in those countries is that for exports. </s> |
776 | <s>[INST] The difference between Argentina, and Chile and Mexico, is that the latter two countries began [/INST] their structural reforms much earlier and are already seeing the fruits of their decisions to invest in new export business, which is something just beginning in Argentina. </s> |
777 | <s>[INST] If Argentina sticks to its structural reforms and consolidates its great competitive leap forward -- [/INST] particularly in an international environment characterized by mild inflation, relatively low growth and liquid financial markets -- external financing will not constitute a constraint to the nation's growth prospects. </s> |
778 | <s>[INST] On the contrary, it will [/INST] remain a healthy component of our growth formula. </s> |
779 | <s>[INST] Domestic versus external saving: The rate of national saving (gross national product less [/INST] consumption) had fallen to a little below 18% in 1990 from 23% in 1980, while the rate of investment declined to 14% from 25%. </s> |
780 | <s>[INST] The sizable 1990 trade surplus did not reflect a healthy economy, [/INST] but rather an economy where capital flight was pervasive and export surpluses found no place on the domestic market. </s> |
781 | <s>[INST] Although the Argentine external sector accounts are very manageable, the government [/INST] does not wish the current account deficit to increase in such a manner that could jeopardize the country's solvency and credibility. </s> |
782 | <s>[INST] But we do not believe that the way to go about this [/INST] is by placing limits on the inflow of capital or by "sterilizing" the current account deficit's monetary effect through strict monetary policy. </s> |
783 | <s>[INST] In other words, we do not believe in addressing [/INST] the current account deficit by means that would set back our formula for sustained growth. </s> |
784 | <s>[INST] This follows our determination to increase the supply [/INST] side of the economic equation -- in this case, the supply of savings. </s> |
785 | <s>[INST] We believe that the best remedy against [/INST] external saving replacing domestic saving is, precisely, to increase the latter. </s> |
786 | <s>[INST] This is the major [/INST] challenge faced by the Argentine economy today. </s> |
787 | <s>[INST] --- Mr. Cavallo is Argentina's [/INST] Minister of Economy and Public Works and Services. </s> |
788 | <s>[INST] ___ Document 291 of 400 Menem Seeks Title of `Mr. Indispensable' --- Argentine Defies [/INST] the Law, Critics With Re-Election Bid Author: By Thomas Kamm Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 29 June 1993: PAGE A15. </s> |
789 | <s>[INST] accountid=28034 Abstract: But, eager to prolong his stay in the Casa Rosada into [/INST] the next century, Mr. Menem and his supporters are pulling out all stops to get Argentina's constitution revised to allow presidents to serve consecutive terms. </s> |
790 | <s>[INST] A bill has been submitted to Congress, [/INST] and there's talk of a plebiscite on the issue shortly after the Oct. </s> |
791 | <s>[INST] 3 elections, in which half the [/INST] seats in the Chamber of Deputies are up for grabs. </s> |
792 | <s>[INST] But beyond Mr. Menem's attempts to portray himself as indispensable [/INST] to Argentina's stability, his critics see a power-hungry, dictatorial streak that reminds them of old-style Latin American caudillos. </s> |
793 | <s>[INST] "This theory of providential men gave us Peron," says economist Adalberto [/INST] Rodriguez Giavarini, alluding to the strongman Juan Domingo Peron, whose dynastic and statist policies contributed to Argentina's long decline. </s> |
794 | <s>[INST] This uneasiness over Mr. [/INST] Menem's intentions comes through in opinion polls. </s> |
795 | <s>[INST] A poll last month by the Buenos Aires [/INST] daily Clarin showed that 67% favor constitutional reform, and 64% favor the possibility of re-election. </s> |
796 | <s>[INST] As soon as the results came out, Mr. [/INST] Menem's Peronist party plastered the city with posters saying, "The people have already decided". </s> |
797 | <s>[INST] But the posters conveniently left out the answer to a [/INST] third question: If Mr. Menem stood for re-election, 52.9% said they wouldn't vote for him, against 30.8% who would. </s> |
798 | <s>[INST] Full text: BUENOS AIRES -- "Menem [/INST] 1995" read the wall posters plastered all over Argentina's capital. </s> |
799 | <s>[INST] Similar messages are emblazoned [/INST] on T-shirts, bumper stickers, even watch faces. </s> |
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