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2,600 | <s>[INST] Even last July's sacking as economy minister of Mr [/INST] Domingo Cavallo, once considered the only guarantee of stability, has not altered the picture, says Mr Secco. </s> |
2,601 | <s>[INST] For him, that in itself is [/INST] proof enough that Argentina's economic prospects rest on solid ground. </s> |
2,602 | <s>[INST] ___ Document 323 of 400 Argentina acts to broaden [/INST] its investor base Author: Pilling, David Publication info: Financial Times [London (UK)] 12 Dec 1996: 34. </s> |
2,603 | <s>[INST] Full text: Argentina this week issued a flurry of paper, [/INST] including its first international offer of peso-denominated debt and a $500m domestic auction of two-year treasury notes. </s> |
2,604 | <s>[INST] The two issues, which came in addition to a DM1bn eurobond placement [/INST] on Tuesday, were aimed to broaden Argentina's investor base, and to take advantage of liquidity to pre-finance 1997 requirements, estimated officially at $14bn. </s> |
2,605 | <s>[INST] The $250m international peso offering was [/INST] led by Goldman Sachs , which bought the whole deal. </s> |
2,606 | <s>[INST] It was described as innovative by traders, [/INST] who said it would help underline market confidence in Argentina's fixed exchange rate. </s> |
2,607 | <s>[INST] The offering carried a fixed coupon of [/INST] 8.75 per cent, with interest to be paid every six months. </s> |
2,608 | <s>[INST] "The issue was definitely a success and the tight [/INST] spread shows people are not worried about convertibility," said Ms Ingrid Iversen, debt strategist at UBS . </s> |
2,609 | <s>[INST] Convertibility is the currency board system, in [/INST] place since 1991, which fixes the peso at parity with the dollar. </s> |
2,610 | <s>[INST] The economy ministry said the euro-peso issue "was part of the [/INST] government's strategy of gradually developing a peso yield curve, which can be used as a reference point for the private sector". </s> |
2,611 | <s>[INST] Government officials said Argentina intended to [/INST] build a peso yield curve up to 10 years. </s> |
2,612 | <s>[INST] "They need to have a couple more issues, taken up by the big [/INST] American and European banks, before we can say there's a sense of confidence in peso paper," said Mr Jerome Booth of ANZ Bank in London. </s> |
2,613 | <s>[INST] "But as time goes on people [/INST] see less and less risk of a change in economic policy". </s> |
2,614 | <s>[INST] Because peso paper is rated investment grade, [/INST] the issue was available to institutions that cannot normally buy Argentine notes. </s> |
2,615 | <s>[INST] "It's a weird concept, but there are people [/INST] who can buy peso paper who can't buy dollar paper," said Ms Iversen. </s> |
2,616 | <s>[INST] "Over time, it is something [/INST] Argentina might use to enlarge its investor base". </s> |
2,617 | <s>[INST] The economic team also made progress in [/INST] deepening domestic capital markets with its first auction of Bontes, two-year dollar-denominated bonds. </s> |
2,618 | <s>[INST] The $502.4m auction was subscribed nearly four times [/INST] and set a coupon of 8 per cent, against expectations of 7.75-8.5 per cent. </s> |
2,619 | <s>[INST] Many private economists believe Argentina's financing needs could rise from the official [/INST] estimate of $14bn to $16bn next year, particularly if its purse strings are relaxed in the run-up to October's mid-term congressional elections. </s> |
2,620 | <s>[INST] But Mr Peter West, economic adviser to WestMerchant [/INST] Capital Markets , is among the majority who believe this should be manageable. </s> |
2,621 | <s>[INST] "While current conditions persist, the country will not have undue difficulty in covering its budget deficit and refinancing the large amounts of [/INST] maturities coming due in 1997," he said Mr Miguel Kiguel, undersecretary of finance, said the average maturity of debt issued in 1996 had been eight years, double that of the previous year, and the trend of lengthening out maturities would continue. </s> |
2,622 | <s>[INST] ___ Document 342 of 400 Battling Cavallo seeks to exploit moral high ground: David [/INST] Pilling and Stephen Fidler on a thorn in Menem's side Author: Fidler, Stephen; Pilling, David Publication info: Financial Times [London (UK)] 05 Dec 1996: 04. </s> |
2,623 | <s>[INST] Full text: When Mr Domingo Cavallo was unceremoniously [/INST] dumped as Argentina's economy minister last July, few could believe how quietly he went. </s> |
2,624 | <s>[INST] Now Argentines are dumbstruck by the [/INST] ferocity with which he has returned to the political stage. </s> |
2,625 | <s>[INST] In a matter of days, Mr Cavallo has demanded the removal of three cabinet [/INST] members, accused judges of "protecting smugglers and tax evaders" and warned President Carlos Menem to rid himself of the criminal elements he allegedly counts among his friends. </s> |
2,626 | <s>[INST] Most recently, Mr Cavallo, architect of Argentina's [/INST] economic transformation, has turned his fire upon Mr Roque Fernandez, his successor. </s> |
2,627 | <s>[INST] Mr Fernandez, he alleges, is too weak to resist the criminal [/INST] organisations trying to fleece the nation and, in his apparent naivety, has shown himself to be either "incompetent or dishonest". </s> |
2,628 | <s>[INST] Such attacks are a thorn in the side of Mr Menem, whose official [/INST] visit to Washington, which began yesterday, has been partly overshadowed by continual haranguing from Mr Cavallo, still the darling of many foreign investors. </s> |
2,629 | <s>[INST] The financial markets have shown [/INST] no sign of being disturbed by the political turbulence. </s> |
2,630 | <s>[INST] Mr Miguel Angel Broda, an economist, says [/INST] Mr Cavallo's accusations are unlikely to disturb Argentina's increasingly robust recovery from recession. </s> |
2,631 | <s>[INST] They have accused Mr Cavallo of lying, being mentally [/INST] unbalanced and - through his denouncements of Argentina on foreign soil - coming close to treason. </s> |
2,632 | <s>[INST] Mr Carlos Corach, interior minister and perhaps Mr Cavallo's bitterest enemy, has filed a suit, joining [/INST] at 'In three months he's said what he should have said over three years' least 20 other politicians, judges and journalists who are pursuing the former economy minister through the courts. </s> |
2,633 | <s>[INST] Mr Corach has demanded Mr Cavallo spend three [/INST] years in jail if he does not withdraw accusations that he manipulates the judiciary. </s> |
2,634 | <s>[INST] Mr Cavallo says he had [/INST] intended to remove himself from politics for 18 months. </s> |
2,635 | <s>[INST] Instead, he has been stung into action by a [/INST] campaign of "judicial harassment" aimed at destroying him politically and showing his team to be "corrupt". </s> |
2,636 | <s>[INST] Former Cavallo appointees are involved in several court cases, including [/INST] a customs scandal and alleged dishonesty in the award of a $249m (£149m) state contract to IBM . </s> |
2,637 | <s>[INST] Mr Cavallo says his dismissal has also left Mr [/INST] Menem exposed to manipulation by politicians wishing to halt economic reform for their own ends. </s> |
2,638 | <s>[INST] He points to an unusual government decision to commit to arbitration a legal dispute [/INST] with companies belonging to Mr Carlos Bulgheroni, president of the Bridas oil and gas group - a "mistake" Mr Cavallo says could cost the nation $1bn. </s> |
2,639 | <s>[INST] He also alleges a recent airport privatisation bill has been tailor-made [/INST] to benefit concessionaires belonging to Mr Alfredo Yabran, a businessman whom Mr Cavallo has frequently accused of running a Mafia-style organisation. </s> |
2,640 | <s>[INST] His spokesman, Mr Wenceslao Bunge, said Mr Yabran was being [/INST] turned into a scapegoat to divert attention from scandals affecting the economy ministry under Mr Cavallo's watch. </s> |
2,641 | <s>[INST] Such has been the ferocity of Mr [/INST] Cavallo's attacks on the government that even his closest allies are unsettled. </s> |
2,642 | <s>[INST] Mr Rosendo Fraga, a political analyst [/INST] and a personal friend, says: "Cavallo's political weakness is impatience. </s> |
2,643 | <s>[INST] In three months he's said [/INST] what he should have said over three years". </s> |
2,644 | <s>[INST] Rather than gradually building what could have been an effective 1999 [/INST] presidential campaign based on the fight against corruption, Mr Cavallo has pushed the government on to the offensive, says Mr Fraga. </s> |
2,645 | <s>[INST] "What option do they [/INST] have but to try to jail him"? </s> |
2,646 | <s>[INST] "Those that believe I am in a fight with Menem are accepting the idea that [/INST] Menem in his second term wants to undo all he has done simply for the benefit of a gang of crooks, instead of continuing Argentina's transformation," he says. </s> |
2,647 | <s>[INST] "I don't want to believe the Menem of [/INST] the second term will be so different from the Menem of the first". </s> |
2,648 | <s>[INST] Mr Cavallo's campaign for a possible attempt at [/INST] the presidency in 1999 begins next year when he runs for Congress as an independent. </s> |
2,649 | <s>[INST] He admits he still lacks a political structure to mount [/INST] a successful campaign in 1999, but says he can carve out the necessary political space over three years. </s> |
2,650 | <s>[INST] One of his closest allies in that process is likely to [/INST] be Mr Gustavo Beliz, a former interior minister in Mr Menem's cabinet who quit in disgust at alleged corruption. </s> |
2,651 | <s>[INST] Mr Beliz says that, although Mr Cavallo's outbursts [/INST] were provoked by "judicial persecution", he runs the risk of confusing the public. </s> |
2,652 | <s>[INST] Like a hurricane raging through Argentine institutions, Mr Cavallo's onslaught [/INST] may in the short term cause such havoc the truth will be hidden in a swirl of insults. </s> |
2,653 | <s>[INST] But in the long term, Mr Beliz says, his decision [/INST] to address the taboos of corruption and the abuse of power could pay dividends for the country. </s> |
2,654 | <s>[INST] ___ Document 346 of 400 IRSA finds room for growth: Argentine [/INST] property group aims to exploit transformed economy Author: Gascoigne, Clare Publication info: Financial Times [London (UK)] 04 Dec 1996: 36. </s> |
2,655 | <s>[INST] Full text: The Mexican currency crisis was a wonderful opportunity [/INST] for property developers, according to Mr Marcelo Mindlin, vice-president of IRSA , Argentina's only quoted real estate company. </s> |
2,656 | <s>[INST] "We were able to buy three [/INST] properties with cash at a very good price," he says. </s> |
2,657 | <s>[INST] Not that IRSA, which has 19 per cent [/INST] of its portfolio in development property, was untouched by the 1994 currency crisis. </s> |
2,658 | <s>[INST] After the early 1990s, a period so flourishing that [/INST] there were worries that Buenos Aires' distinctive skyline would be altered beyond repair, the development market died. </s> |
2,659 | <s>[INST] It was only income from rental properties - which account for [/INST] 52 per cent of IRSA's portfolio - that maintained the company's 1996 profits at $21m, a level similar to 1995. </s> |
2,660 | <s>[INST] Earnings per share, however, dropped 15 per cent [/INST] to $1.87 per Global Depositary Receipt and net sales fell 40 per cent to $35.2m. </s> |
2,661 | <s>[INST] "In emerging countries you have [/INST] to be twice as financially conservative," Mr Mindlin says. </s> |
2,662 | <s>[INST] Hence the company's insistence on [/INST] maintaining a balance between development and rental properties. </s> |
2,663 | <s>[INST] "We are in a very good position to take advantage of the [/INST] transformation in the economy over the past six months - the room for the business to develop is immense," he says. </s> |
2,664 | <s>[INST] Buenos Aires has some of [/INST] the cheapest real estate in the world. </s> |
2,665 | <s>[INST] Purchase prices for prime office space average out at $2,600 a [/INST] square metre, compared with $3,000 in Sao Paulo and $8,393 in developed cities such as New York or Paris. </s> |
2,666 | <s>[INST] Yields can go as high as 13 [/INST] per cent, against the 6 per cent in Europe and North America. </s> |
2,667 | <s>[INST] IRSA has 45 per cent of its $217m [/INST] property portfolio in office space, and has a policy of renting to blue-chip tenants. </s> |
2,668 | <s>[INST] It owns 13 properties in Argentina, including flagships [/INST] such as the Pirelli and Libertador buildings, and has occupancy rates of 97 per cent. </s> |
2,669 | <s>[INST] The remainder of its portfolio [/INST] is split 50-50 between retail and residential. </s> |
2,670 | <s>[INST] In a country where the average length of a mortgage is seven years and mortgages amount [/INST] to only 2 per cent of GDP (against 6 per cent in Mexico and 19 per cent in the UK), Mr Mindlin believes the potential for residential growth is significant. </s> |
2,671 | <s>[INST] "Economic stability is making the banks more willing to give credit," he says, while the privatisation of the [/INST] pension funds should help grow the market in mortgage securitisation; Argentina's pension funds currently have assets of about $5bn, or 2 per cent of GDP, compared with 35 per cent of GDP in Chile. </s> |
2,672 | <s>[INST] IRSA's flagship residential development is Abril, an 310 hectare estate just outside [/INST] Buenos Aires that it is developing in partnership with Alto Palermo , the real estate subsidiary of oil conglomerate Perez Companc . </s> |
2,673 | <s>[INST] The planned development includes sports facilities, shops and a school [/INST] as well as houses, and the first sales are expected to come through towards the end of fiscal 1997. </s> |
2,674 | <s>[INST] On the retail side, it is concentrating on supermarkets and shopping centres, although developments [/INST] such as Mercado de Abasto in Buenos Aires, in which IRSA holds a 31 per cent stake, are a combination of residential, retail and leisure. </s> |
2,675 | <s>[INST] The company's high levels of cash reserves both [/INST] act as a cushion and help it to take advantage of cheap opportunities. </s> |
2,676 | <s>[INST] At the end of June, IRSA had $73.7m [/INST] in cash, 23 per cent of its assets, and it aims to make further acquisitions. </s> |
2,677 | <s>[INST] Analysts believe the company [/INST] could increase its leverage, but remain cautious. </s> |
2,678 | <s>[INST] "It is a very shrewd management team that has made [/INST] the right investment decisions, but I would be wary if they increased their debt further," said one. </s> |
2,679 | <s>[INST] Outside Argentina, IRSA has operations in [/INST] Brazil and Venezuela, both with local partners - a crucial element. </s> |
2,680 | <s>[INST] "We want to repeat our strategy in other countries, taking [/INST] advantage of a sector with big potential in a growing economy with a lack of competition," he says. </s> |
2,681 | <s>[INST] Hence a reluctance to move into Chile, [/INST] where the real estate market is already well developed and competitive. </s> |
2,682 | <s>[INST] ___ Document 378 of 400 Bucaram polishes his [/INST] economic plans Author: Newsome, Justine Publication info: Financial Times [London (UK)] 21 Nov 1996: 03. </s> |
2,683 | <s>[INST] Full text: Ecuador's President Abdala Bucaram, nicknamed El Loco , [/INST] or "the Madman", is putting the final touches to his economic programme, now due for release next week. </s> |
2,684 | <s>[INST] Central to it is Mr Bucaram's desire to introduce an Argentine-style [/INST] currency convertibility plan, under which Ecuador's currency would be fully convertible with the US dollar at a fixed nominal exchange rate. </s> |
2,685 | <s>[INST] Mr Bucaram, who has been advised by the architect of [/INST] the Argentine plan, Mr Domingo Cavallo, believes convertibility would provide the sort of economic discipline that Ecuador needs. </s> |
2,686 | <s>[INST] However, others are less enthusiastic [/INST] about being put into such a straitjacket. </s> |
2,687 | <s>[INST] For example, the central bank would be deprived of flexibility to deal with [/INST] shocks to Ecuador's economy, such as a war with neighbouring Peru or a financial crisis, both of which have occurred in the past two years. </s> |
2,688 | <s>[INST] Some analysts question whether Ecuador really needs such [/INST] a drastic measure, in which money is issued only if backed by hard currency reserves. </s> |
2,689 | <s>[INST] Inflation for example, is around 25 per [/INST] cent, not the 5,000 per cent experienced by Argentina at the time. </s> |
2,690 | <s>[INST] According to on Argentine economist, "Convertibility is [/INST] not necessary in Ecuador, but it will not be negative or bad either". </s> |
2,691 | <s>[INST] Looking at the Argentine experience of 19 per cent [/INST] unemployment and a strong currency, unions and exporters are not happy at the prospect either. </s> |
2,692 | <s>[INST] Mr Pablo Concha, finance minister, has [/INST] been doing his best in a bid to soothe nerves. </s> |
2,693 | <s>[INST] "Convertibility is being satanised because of unemployment," he complained [/INST] a few days ago and says there is a lot more to the economic plan. </s> |
2,694 | <s>[INST] Indeed, the government is aware that important structural reforms [/INST] and tight fiscal discipline will be needed to implement such a plan and stick to it. </s> |
2,695 | <s>[INST] Top of the list, for instance, are measures to make the [/INST] labour market more flexible, to restructure the current Monetary Board , and to improve supervision of the financial system. </s> |
2,696 | <s>[INST] Mr Concha plans to balance the 1997 public sector budget, but in order [/INST] to do so, a host of reforms to reduce tax evasion, remove exemptions from VAT and even impose new taxes on luxuries are expected. </s> |
2,697 | <s>[INST] Telephone tariffs are set to rise up to six times, [/INST] depending on the sector, from December 1 as state telecommunications company Emetel is prepared for privatisation in April. </s> |
2,698 | <s>[INST] Reforms to budget-setting procedures, for example, by removing the executive's discretionary power [/INST] to raise spending by 10 per cent more than the amount approved by Congress , are intended to complement specific revenue-raising measures. </s> |
2,699 | <s>[INST] Putting all these reforms mean it [/INST] may be the end of next year before convertibility is adopted. </s> |
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