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conomy and architect of the country's 1991 convertibility law, which ties the Argentine peso to the U.S. dollar. He was pushed out of the Menem government in 1996 because he wouldn't keep quiet about what he suspected were links between organized crime and the government. In particular, Mr. Cavallo worried aloud that the "mafia" would buy privatized airports and the post office and use both for illegal trade. Some said his political ambition had gotten the better of his judgment. Since then deeply disturbing evidence has surfaced to indicate that Mr. Cavallo was right. Stories of attempts to bribe judges, for instance, surface regularly now. And public outrage and suspicion has grown. While Mr. Cavallo's newly founded Action for the Republic party won only 17% of the vote in the city of Buenos Aires and three seats in congress, his outspoken anti-corruption theme is the current driving force in Argentine politics. The lesson from the Argentine elections is that one of the great attributes of democracy is that it makes the political class accountable, however much it dislikes that burden. At the same time, the Argentine democracy awarded consensus support to an economic policy that had produced price stability and growth. Amid Asia's turmoil, it ought not be lost on its leaders that an open system can indeed reward economic success while rooting out the least productive political instincts.

at number. But growth is going to be around 8 per cent for 1997," he said. The turmoil meant Argentina would face higher international borrowing costs, he said. "But by January or February I believe we will see a significant recovery of the lower borrowing spreads we had before the crisis." Argentine manufacturers are already clamouring for protection against low-priced products from Asian countries which have devalued. But Mr Fernandez said there had been no significant impact on the import numbers so far. "Argentina is more open to this possibility than the European Union or the US. We have tariffs, but no quotas on imports. If there were an impact on specific industries, such as footwear or textiles, we might ask for safeguards through World Trade Organisation procedures." Mr Fernandez said he was losing no sleep over the possibility of Asian financial contagion spreading to Brazil, which accounts for about 30 per cent of Argentine exports. Brazil had recognised it could no longer live with a fiscal deficit of 5 per cent of gross domestic product, he said. "It has made the right diagnosis and is taking the right actions. I would be more worried about Brazil if it said its problems stemmed from George Soros or actions of speculators." He denied Argentina was over-dependent on trade with Brazil. "But I wish we could diversify our exports much more. The truth is we are selling wherever we can get market access." On the domestic front, Mr Fernandez said Argentina was committed to reforming the country's antiquated labour

___ Document 237 of 500 Argentina Likely to Brave Storm From Brazil and Grow in 1999 Author: By Craig Torres Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 02 Nov 1998: A30. http://search.proquest.com/docview/398651490?accountid=28034 Abstract: Argentina is expected to surprise the skeptics again by growing in 1999 despite a deeper-than-anticipated recession in Brazil, its largest trading partner. Brazil announced spending cuts and tax increases last week that are likely to result in an even deeper economic contraction. Ordinarily, that would be bad news for Argentina because Brazil absorbs a third of all Argentine exports. But economists think that Argentina can sidestep Brazil's economic troubles and grow anywhere from 1.8% to 3.5% next year. The country's resilience is in part a lesson about how officials in Argentina have skillfully managed their risks. While Brazil struggles with billions of dollars in short-term debt, Argentine officials have secured a diversified financial backstop of more than $5 billion to help it roll over its maturing bonds. Full text: BUENOS AIRES -- Argentina is expected to surprise the skeptics again by growing in 1999 despite a deeper-than-anticipated recession in Brazil, its largest trading partner. Brazil announced spending cuts and tax increas

est. "Valuations have improved across the region and the fundamentals of Argentina are very attractive," said Andrew de Pass, a managing director at Citicorp Equity Capital Latin America. The stability of the currency and the economy in the face of the Asian crisis was a testament to the success of economic policies, he added. Private equity funds represented at a conference in Buenos Aires this week - such as the US-based Hicks Muse Tate & Furst and Newbridge Latin America - have invested $5bn-$7bn in Argentina in recent years, buying into family-owned conglomerates, small businesses and government privatisations. The funds, which are financed by institutional investors and private family trusts, buy into fragmented high-growth sectors for a period of three to seven years before selling to a strategic partner or going public. However, private equity investors may find it difficult to obtain the projected returns that they seek - upwards of 30 per cent - because of lower prices and a drop in liquidity. Bruce Catania, another managing director at Citicorp Equity Capital Latin America, said that stock market investors, like mutual funds, had moved away from emerging markets to safer investments. "It's a double-edged sword," he said. "If you are starting up a fund, the turbulence in Asia has reduced valuations so you can find assets at more attractive prices. On th

it has shed most of them to concentrate on the telecommunications business. In March, it took indirect control of Telefonica de Argentina by buying shares held by the family that owns yet another conglomerate called Perez Companc SA. Perez Companc is perhaps the best example of how Argentine conglomerates are changing as the country completes its transition from a closed, state-run system to a more open, free-wheeling economy. In the late 1980s, Perez built roads, owned a retailer, ran a shipping line and made chocolate, cement and telephones. Then, when President Carlos Menem liberalized the economy, Perez bet big on the privatization of the energy and telecommunications sectors. Now, it's selling off holdings and ploughing the profits into oil and gas-related businesses, not only at home but in the South American countries of Bolivia, Brazil and Venezuela. "When the economy was closed, greater diversification of business lines was key to minimizing risk," says Perez Vice President Oscar Vicente. "Now we are diversifying within the same line of business, but in several countries." Not all of Argentina's conglomerates are streamlining voluntarily. Santiago Soldati, chairman of Sociedad Comercial de la Plata, is still a big believer in diversification, citing companies in East Asia as an example of why a conglomerate structure still makes sense. Mr. Soldati's bankers aren't quite as confident. They've pressured Comercial del Plata to reduce its $760 million in debts by unloading some of the assets it picked up during the early 1990s. These include oil and gas fields, waterworks, a power plant, a gas distributor and two train companies, one of which the conglomerate has transformed into an entertainment business. Last month, the company announced it would sell or publicly list half of its $1 billion in assets by the end of next year. Credit: Staff Reporter of The Wall Street Journal

e. "He would [look] for ways to make public expenditures more efficient." But just how much latitude Mr. Lopez Murphy or any other economist would have within Mr. de la Rua's cabinet is a big question. Part of the strength of Mr. de la Rua's candidacy rests in the Alliance, an uneasy coalition formed by the Radical Party with various left and center-left parties. Argentina has shown remarkable resilience in the face of one of the most turbulent years ever for emerging economies. Even with its gigantic neighbor Brazil on the rocks Argentina experienced little capital flight, a sign that the public believes the currency scheme here is bullet-proof. That said, the next government faces urgent tasks, including fixing chronic unemployment and making Argentine industry more competitive. Mr. Redrado says breaking monopolies with an eye toward allowing fast-growing services such as the Internet to flourish is "the most important strategic issue." The Peronists have yet to choose their own candidate for the elections which are likely to be held in October next year. But analysts add that Mr. Menem's party doesn't have much room to debate the economic model, either. The governor of Buenos Aires province and Peronist presidential contender, Eduardo Duhalde, has criticized the exclusion produced by freemarket policies, but nobody has taken his remarks seriously, especially since he was recently seen courting Mr. Menem's former economy minister, Domingo Cavallo, in a cafe. "None of the candidates has a lot of room to discuss the economic model without hurting themselves," says Carlos Acuna, a political scientist. Credit: Staff Reporter of The Wall Street Journal

ed Mexico's surprise December 1994 devaluation. However, gross national product (GNP) bounced back 4.3 per cent last year. Mr Miguel Angel Broda, who heads a Buenos Aires economic consultancy, is forecasting GNP growth of at least 7.3 per cent this year, "but it could easily be 8 per cent". The economy ministry's official forecast is still 6 per cent, but officials privately admit growth could be higher. Ken Warn , Buenos Aires Copyright Financial Times Limited 1997. All Rights Reserved.

___ Document 311 of 600 Private equity investors turn to Argentina Author: Mandel-Campbell, Andrea Publication info: Financial Times [London (UK)] 31 July 1998: 07. http://search.proquest.com/docview/248631870?accountid=28034 Abstract: Private equity investors are being tempted by falling asset values across Latin America, despite the effects of the Asian market crisis on the region. In the case of Argentina, relatively strong economic fundamentals have added further incentives to invest. "Valuations have improved across the region and the fundamentals of Argentina are very attractive," said Andrew de Pass, a managing director at Citicorp Equity Capital Latin America. The stability of the currency and the economy in the face of the Asian crisis was a testament to the success of economic policies, he added. Private equity funds represented at a conference in Buenos Aires this week - such as the US-based Hicks Muse Tate & Furst and Newbridge Latin America - have invested $5bn-$7bn in Argentina in recent years, buying into family-owned conglomerates, small businesses and government privatisations. Full text: Private equity investors are being tempted by falling asset values across Latin America, despite the effects of the Asian market crisis on the region. In the case of Argentina, relatively strong economic fundamentals have added further incentives to inv

imports, while exports faltered. Argentina ran a trade deficit of $518m (£320m) in July, against a surplus of $66m in the same month last year. The country has accumulated a trade deficit of $1.9bn in the first seven months of this year, against a surplus of $567m in the equivalent period of last year, according to official figures published on Monday night. The sharp deterioration in the trade position has come against a background of strong investment-led growth. July exports were down 3 per cent year-on-year to $2.2bn, while imports surged 17 per cent to $2.7bn. The worsening trade position, coupled with Argentina's fiscal deficit, has led some local commentators to question the solidity of the current expansion. Last week ING Barings raised its forecast for this year's current account deficit from $6.6bn to $8.8bn, equivalent to 2.7 per cent of GDP, and forecast a deficit ratio of 3.6 per cent next year - the same as in 1994, the year before Argentina's financial crisis. It urged the government to make a more aggressive effort to eliminate the fiscal deficit. Argentina is likely to be hard-pressed to keep its 1997 broad fiscal deficit down to the $4.5bn target agreed with the In

similar characteristics to Argentina's monetary chaos in 1990. The Indonesian rupiah has fallen to 9,700 to the U.S. dollar from 2,400 in July 1997. With hyperinflation a predictable outcome of such a monetary collapse, serious measures are in order. The successful results of the Argentine Convertibility Law can be explained, in part, by the virtues of this monetary system itself. But also, perhaps more fundamentally, because the government has harnessed the popular support generated by stability to implement deep structural changes in the country's economy. First, let me explain the three key characteristics of the Argentine system: -- There are two currencies circulating and they are broadly used: the Argentine peso and the U.S. dollar. Financial intermediation (banking) occurs indistinctly in both. This means that a decision by Argentines to use more dollars and fewer pesos does not necessarily produce a credit crunch in the economy. -- The Argentine peso is convertible to dollars at a fixed parity, but the central bank is not obliged to buy all the dollars that are offered in the market. Therefore, Argentine monetary policy is determined by the U.S. Federal Reserve, but only because the peso is weaker than the dollar. Argentina could have an active monetary policy if the situation were reversed, for instance with the Fed adopting an inflationary monetary policy while Argentina pursued a more conservative price stability target. -- Through successive crises, Argentine monetary authorities have proven that they are willing to permit the complete dollarization of the economy rather than abandon the commitment to convertibility or promote extremely high interest rates. In this sense, the management of the Argentine monetary system is unlike that of Hong Kong's currency board. During the Asian crisis Hong Kong's monetary authorities have used monetary activism to force a significant rise in interest rates, demonstrating that they do not want to allow a shift from Hong Kong dollars to U.S. dollars in the portfolio of currency holders. As a consequence, Hong Kong's U.S. dollar reserves have increased more than $15 billion since July; equity and real estate prices have fallen more than would have occurred without such a policy. In Argentina, on the other hand, the Convertibility Law minimized the increase in interest rates, even when the country's demand for dollars increased. The Convertibility Law was not implemented as a means to avoid or postpone any of the measures demanded by economic restructuring. Rather, it makes them politically feasible. Simultaneous with its implementation, the economy was opened, legal monopolies were eliminated and the financial system reformed. Monetary stability helped economic policy makers, political leaders and the public to understand the need for these changes because distortions and vested interests became more evident. The available information on the Indonesian initiative does not make clear whether the proposed currency board for

dollar bond issue in exchange for the retirement of at least $1bn (£600m) of its old-style restructured debt. The transaction, which Argentina hopes will enable it to cast off its 1980s image as a country with serious debt problems, comes at a time of wavering confidence in emerging markets as a result of the financial turmoil in Asia. However, Argentina, which has chalked up steady improvements in its economic performance over the last three years, is expected to get a positive reception on the international bond markets. "This is a very bold move," said Mr Peter West, chief economist of BBV Latinvest . "But it is probably a clever move. Emerging market bond prices have been much less badly affected than stock market prices by the recent turbulence in Asia." Argentina has offered investors cash or new 30-year US dollar bonds in exchange for the retirement of all of its outstanding Brady bonds. Brad

at best be demanding an additional $350m-$400m in equities in the fourth quarter, he estimated. New offerings include a planned IPO by Banco Rio de la Plata , which is 35 per cent owned by Spain's Banco Santander . On the positive side, the issues will expand Argentina's narrow range of blue chips, where the dominant group is energy company YPF, with a market capitalisation of more than $10bn. The fundamentals of the market remained strong, Mr Guevara said. "We are forecasting earnings growth of 16 per cent next year and 18 per cent in 1999." So far this year the Merval has risen more than 25 per cent, no match for the gains in Mexico or Brazil. "I don't see a significant rally until after the elections, when a rise to 850 or 860 points is possible," said Daniel Tassan of Deutsche Morgan Grenfell . His target for the next 12 months is 1,000 points. As ever in Latin America, politics is something of a wild card. The stock market already appears to be discounting a less-than-stellar performance by the ruling Peronist party following strong gains by the Alliance, which groups the main opposition parties. However, steady growth over the longer term is the market consensus - just as long as the rest of the world behaves. Ken Warn Copyright Financial Times Limited 1997. All Rights Reserved.

g unit. The alliance of opposition parties, previously preoccupied with opposing Mr. Menem, will now have to define clear and credible economic proposals that they have sorely lacked. The Peronists also have more room to redefine their platform and rebuild their popularity, which has been damaged by the public fight between Mr. Menem and Eduardo Duhalde, the Buenos Aires provincial governor. Mr. Duhalde opposes Mr. Menem's re-election and threatened to hold a September plebiscite in his province on the issue. The Peronists are expected to hold party primaries in April. Theoretically, they could choose Mr. Menem as the candidate and again seek to win a favorable reading of the constitution. But analysts are taking Mr. Menem's renunciation at face value, and say he wants to head the Peronist party after finishing his term. There's no obvious front-runner to take his place. Mr. Buonuome, the Deutsche Bank economist, says Ramon Ortega, a former pop singer and close Menem ally who currently heads social development, is likely to be tapped for the candidacy. Sen. Carlos Reutemann, a former governor and race-car driver, is also said to be favored by some Peronist factions, while some analysts hold up Mr. Duhalde as a longshot possibility. Mr. Menem formally announced his desire for a third term only last week. But by the weekend, his chances were already severely damaged after the Peronist party congress on the issue last Friday produced a surprisingly tepid endorsement, while a consensus against re-election began to form rapidly among leading thinkers and powerful sectors of society. Credit: Staff Reporter of The Wall Street Journal

___ Document 154 of 500 The Americas: Don't blame the free market for Argentina's woes Author: O Grady, Mary Anastasia Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 30 May 1997: A, 19:3. http://search.proquest.com/docview/398615715?accountid=28034 Abstract: Mary Anastasia O'Grady says a popular Argentianian backlash against Pres Carlos Saul Menem's economic reforms in the Oct 1997 mid-term congressional elections is probably not in the cards even as campaigning politicians rail against the all-culpable "market," adding that a reversal of the present economic course remains only a remote possibility. Full text: BUENOS AIRES -- At a banking conference here last week, Carlos Rodriguez, chief adviser to the Argentine Economics Ministry, boasted about the country's buoyant economy. In his analysis, Mr. Rodriguez estimated that gross domestic product grew at an 8% annualized rate in the first quarter. He said that industrial production is strong, tax revenues are up, and exports are growing. The one-to-one parity of the peso to the U.S. dollar remains intact and inflation is low. Unemployment is high, to be sure, but the economy has begun creating new jobs. Contrast this ebullient report with the shocking level of Argentine cynicism about President Carlos Saul Menem's regime -- as reflected in opinion polls -- and one is bound to be confused. One problem is that Argentines perceive their new economy as a "market" system, even though it teems with private monopoly concessions and other distortions. They have thus come to see the "market" as a beast that always favors someone other than themselves. As one cab driver told me, "The country is doing very well but the people are not doing well at all." This sentiment, repeatedly expressed by Argentines of almost all classes, is an intriguing contradiction. How can things be so good and yet so awful? Should we worry that the October mid-term congressional elections will serve as a referendum against the economic reforms of the last six years? A popular backlash against the president's reforms is probably not in the cards even as campaigning politicians rail against the all-culpable "market." The reforms were largely accomplished by the political will of a presidential strongman who invoked executive decrees over 1,000 times. But a reversal of the present economic course remains only a remote possibility. The opening of the

g dollar - and peso - has set local exporters squealing. Should Argentina be looking for a more flexible monetary regime? Even posing the question demonstrates ignorance of Argentina's economic and political realities, officials say. Argentina is not a healthy, developed economy which could readily engineer a modest devaluation to improve its competitiveness, they argue. It is a nation seared by its experience of financial instability. Convertibility pulled the country back from the abyss, and there are no votes in suggesting an alternative. "No politician dares to propose a change that risks bringing inflation back to the country," said Roberto Alemann, economist and former economy minister. Under the currency board system, only money backed by foreign reserves can be issued. The central bank in effect hands over the setting of interest rates to the markets. Most Argentines, with memories of racing round the supermarket before prices rose, appear happy with this arrangement. A downside of convertibility is that it gives the authorities no policy instruments to fine-tune the economy. During the 1995 "tequila crisis" interest rates soared as deposits fled the banking system, plunging the economy into a brief but sharp recession. But convertibility held. After the Asian financial crisis broke with full force last October, Argentina's country risk premium (the higher interest rates it must pay compared with rates on US Treasury bonds) rose from 361 to more than 800 basis points, before falling back towards pre-crisis levels as fears of contagion eased. Convertibility never looked under serious threat and bank deposits grew. The external account, however, is under increasing stress, with the 12-month accumulated trade deficit already outstripping the $5bn limit agreed earlier this year with the IMF. An IMF mission last month urged measures to slow domestic demand and stressed the need to press on with structural reform to enhance competitiveness. A change of monetary regime, however, was most definitely not on the IMF prescription list. Even supposing such a change could be engineered, it is doubtful decoupling from the dollar would do much to help exporters. Three factors are driving the wor

crisis, according to a report published yesterday by the credit rating agency, Moody's Investors Service . The report says the system still suffers from poor disclosure standards and unreliable reporting of problem loans, one aspect of weaknesses that remain in the surveillance and the prudential supervision of the banking system. Banks' asset quality remains poor and profitability among the weakest in Latin America. Retail deposits remain mobile, with average duration of deposits 70 days. "Banks lack a reliable and sustainable level of retail deposits," said Daniel Sarp, co-author of the report. Weak institutions remain among private, public and co-operative sector banks. Moreover, the government handles bank failures on a case by case basis. "The Argentine authorities' approa

ternational Monetary Fund . However, Barings believes the current account deficit should be sustainable, given the high levels of foreign investment and the absence of any external shock. Foreign direct investment this year is expected to reach $6bn-$6.5bn, according to private forecasts, against an annual average of $3.5bn from 1990 to 1995. "I am not concerned about the trade deficit," said Raul Strong growth led by investment Buonuome, chief economist at Deutsche Morgan Grenfell in Buenos Aires. "It is related to transitory conditions in the commodity markets and strong foreign investment. This is bringing in lots of capital goods, which make up more than 30 per cent of imports." Argentina's export performance was better than it appeared in the headline figures, he added. Exports were up 13-14 per cent in volume terms in the first seven months of this year, but were hit by weak prices for oil and other primary products. In the longer term, prospects for Argentina's agricultural exports were particularly good as Europe and the US began deregulating and reducing subsidies to their agriculture industries, Mr Buonuome said. Copyright Financial Times Limited 1997. All Rights Reserved.

___ Document 344 of 500 Brazil, Argentina Ponder Real's Future as Region Officials Meet Author: By Jonathan Friedland Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 14 Nov 1997: A12. http://search.proquest.com/docview/398602756?accountid=28034 Abstract: Brazilian President Fernando Henrique Cardoso and his Argentine counterpart, Carlos Menem, say they are confident Brazil can defend the value of its embattled currency, the real. But their economy ministers will meet behind closed doors today to discuss what to do in the event of a devaluation. Carlos Rodriguez, Argentina's vice minister of the economy, says he still considers it unlikely Brazil will be forced to devalue. But he adds that regional economy ministers and central-bank heads meeting today in Montevideo, Uruguay, will analyze possible policy responses should Brazil abandon its managed-currency regime. The meeting, which had been scheduled for Oct. 31, brings together members of Mercosur, the three-year-old customs union set up by Argentina, Brazil, Paraguay and Uruguay. "There will be discussion of compensatory mechanisms in the event of a substantial misalignment," says Mr. Rodriguez in an interview. For instance, Argentina might ask Brazil to promise not to take advantage of a cheaper currency to flood its neighbor with new exports. Full text: BUENOS AIRES -- Brazilian President Fernando Henrique Cardoso and his Argentine counterpart, Carlos Menem, say they are confident Brazil can defend the value of its embattled currency, the real. But their economy ministers will meet behind closed doors today to discuss what to do in the event of a devaluation. Carlos Rodriguez, Argentina's vice minister of the economy, says he still considers it unlikely Brazil will be forced to devalue. But he adds that regional economy ministers a

___ Document 225 of 500 World Bank Approves* Loans Of $3 Billion for Argentina Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 11 Nov 1998: B7A. http://search.proquest.com/docview/398779274?accountid=28034 Abstract: The World Bank approved $3 billion in loans to help Argentina strengthen its financial system and implement further economic reforms. Full text: WASHINGTON -- The World Bank approved

favors employment rather than taxes. Since hard money has been a political and economic success for Argentina, who is in line to emulate the experience? Believe it or not, Mexico. A move onto a fixed dollar parity would offer relief from the six-year cycle of devaluation and collapse that coincides with presidential terms. Halfway into the current cycle, the government has just spent its way to winning the forthcoming congressional elections. For the presidential election in 2000 we can expect even more politics and less economic stability. Mexico can change all that by going on a dollar-based system. Argentina's currency board-like arrangement would be ideal for Mexico, except for one small problem: credibility. Mexico remains suspect and hence must take more drastic steps. In order to address this, Mexico should go one step further and get rid of the peso almost completely. Specifically, the entire banking system should operate in dollars. That way any fears of junking the currency board or of yet another devaluation would become impossible. This rather radical reform would establish an unprecedented level of confidence. The argument on the other side -- that this is politically impossible, nationalism won't permit it -- is outdated. Mexican per capita GDP today is still where it was in the mid-'70s. If Mexico cannot manage a competitive exchange rate, it must get rid of its exchange rate. On a dollar system, wages and prices would quickly converge to U.S. levels, the official system of wage fixing (known as the pacto) would fortunately become impossible, risk premiums in credit markets would shrink, and the credit market would come back to life. The loose cannon -- the peso -- would be rendered harmless. Whatever it does in the monetary area, Mexico is on probation for years to come. The U.S. cannot do much to help Mexico along -- such proposed reforms as monetary union and a Mexican seat on the Federal Reserve Board are inconceivable. But the best chance to make headway is to use a system that is known to have worked well elsewhere. As Argentina's experience shows, stable money is the beginning of economic prosperity and political stability. Mexico needs both and has the prospect of neither. After too many experiments, hard money now, before the next devaluation, is the safest way. --- Mr. Dornbusch is a professor of economics and international management at MIT.

___ Document 123 of 500 Argentina, Its Economy Sizzling, Is Cool to IMF Author: By Craig Torres Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 02 Apr 1998: A14. http://search.proquest.com/docview/398653237?accountid=28034 Abstract: Argentina's economy is growing at a much faster rate than forecasters expected, but the country's trade deficit also appears to be deteriorating toward levels that may cause a team of International Monetary Fund officials visiting the country this week to urge some cool-down measures. Leading indicators show the economy expanding at a surprising 6.5% to 7% rate in the first quarter compared with the year-earlier period, thanks to robust investment and rising consumption. Wall Street economists figured the impact of Asia's economic crisis on world demand would slow Argentina's economy down to 4% annual growth from an estimated 8.4% in 1997. But Argentina has already set off one alarm at the IMF by overshooting a rolling 12-month target on the trade deficit by $385 million in January, says Pedro Lacoste, an independent economist here. At current rates of economic growth, Mr. Lacoste estimates the country will also overshoot the consensus forecast on the current-account deficit of around 4% of gross domestic product and push it to 5% of GDP, which is a widely perceived limit of investor tolerance. (The current account is the widest definition of a country's imports and exports of goods and services.) Full text: BUENOS AIRES -- Argentina's economy is growing at a much faster rate than forecasters expected, but the country's trade deficit also appears to be deteriorating toward levels that may cause a team of International Monetary Fund officials visiting the country this week to urge some cool-down measures. Leading indicators show the economy expanding at a surprising 6.5% to 7% rate in the first quarter compared with the year-earlier period, thanks to robust investment and ris

___ Document 496 of 600 Buenos Aires feels chill of financial upheavals: But despite problems, economic growth forecasts are upbeat: Author: Warn, Ken Publication info: Financial Times [London (UK)] 18 Nov 1997: 06. http://search.proquest.com/docview/248584140?accountid=28034 Abstract: Argentina's economy continues to generate impressive growth statistics. Last week the economy ministry said industrial production in October hit a new record, up 9 per cent from a year ago, leaving gross domestic product on track to grow about 8 per cent this year. But those numbers already feel like history. Analysts have been trimming their growth forecasts since the global financial turmoil. And the austerity package announced last week in Brazil, Argentina's main trading partner, has further damped expectations. Despite these negatives, many analysts are making only modest cuts in their growth forecasts. Walter Molano of SBC Warburg in New York, who was earlier predicting a "floor" of 6 per cent growth next year, has adjusted his forecast down to 4{1/2}-5 per cent. Full text: Argentina's economy continues to generate impressive growth statistics. Last week the economy ministry said industrial production in October hit a new record, up 9 per cent from a year ago, leaving gross domestic product on track to grow about 8 per cent this year. But those numbers already feel like history. Analysts have been trimming their growth forecasts since the global f

convince them it is a potential national government, following its triumph in last month's mid-term elections. An Alliance delegation will next week visit Washington, New York and Frankfurt. It will include, for differing legs of the visit, Fernando de la Rua, the mayor of Buenos Aires city, and Graciela Fernandez Meijide, the Alliance's triumphant candidate for deputy in Buenos Aires province. The two are seen as the frontrunners for the Alliance presidential nomination in 1999. The Alliance, which comprises the centrist Radical party and the centre-left Frepaso, last month deprived the ruling Peronists of their abs

shares. Though the tender offer was made at a 35% premium to the stock price, analysts were critical, saying Disco's controlling shareholders were getting the company at a cheap valuation of 0.42 times estimated 1998 sales. Exxel and Promodes are laying out 0.75 to one times estimated sales for Tia, assuming the deal includes the assumption of debt, analysts say. While the lofty price for Tia would lend support to criticisms about the Disco tender offer price, analysts said Exxel and Promodes might also be overpaying, especially because Argentina's economic growth will slow next year. "Of the 12 transactions in the Latin American supermarket sector in the last year, this is by far the most expensive," said Thomas Mobille, global retail coordinator for Robert Fleming. A spokesman for the Exxel Group confirmed the general terms of the deal as reported in Argentine newspapers, but declined further comment until the transaction concludes. A spokesman declined to comment on the deal's valuation relative to other acquisitions earlier this year. Credit: Staff Reporter of The Wall Street Journal

___ Document 293 of 400 AGRICULTURE Prosperity after years of neglect Author: Warn, Ken Publication info: Financial Times [London (UK)] 01 July 1997: 06. http://search.proquest.com/docview/248387331?accountid=28034 Abstract: None available. Full text: * by Ken Warn Prosperity after years of neglect Foreign investors are responding to the turnaround in the sector's prospects Not all the news from Argentina's provinces is bad. While images of angry protesters demanding jobs from the government have filled the nation's television screens, steady recovery in the agricultural sector has been bringing renewed prosperity to some rural communities. Farmers have been buying more tractors and cars, stores and supermarkets have been opening in farming towns and there has even been some reverse migration from the cities. But the change has been a long time coming. The sector which powered Argentina's development from the late 19th century, briefly turning it into one of the world's richest nations, has suffered 50 years of low investment levels. That may now be working to the country's advantage. "In some ways the neglect has been quite beneficial," said Mr Chris McMaster, director of the agricultural investment company Cosechar en Argentina . "We haven't over-used fertilisers or irrigation and can modernise the sector from a good basis." Agro-industry exports last year reached $8.8bn - 80 per cent higher than in 1990. The 1996-97 grain harvest is at record levels, despite a severe drought affecting important growing areas. Prospects for the beef industry, once the mainstay of the whole economy, have brightened this year, despite continuing low prices and the blows to beef's image caused by the outbreak of bovine spongiform encephalopathy (BSE) known as "mad cow disease", in Europe. In May, Argentine herds were declared free of foot-and-mouth disease, with vaccination, after a long campaign. In addition, the US Congress is weighing an Administration decision to open American m

bank, said Havana was willing to talk with creditors about ways of finding "real solutions" to the island's hard currency foreign debt of more than $10bn. Mr Campbell was encouraged by the reception the Argentine proposal had received so far. But he added: "It won't be short-term. It will be complex". The Argentine initiative followed a debt rescheduling accord agreed in March between Cuba and 182 companies from Japan, Cuba's single biggest creditor. The March agreement spread repayment of about $750m of Cuban debt over 20 years. In total, Cuba owes some $2bn in official and private-sector debt to Japan. Cuba's $1.68bn debt to Argentina consists of official bilateral debt, of which $1.2bn is principal and the rest interest. Mr Campbell said he had also discussed with Cuban officials a Cuban request to join the 11-member ALADI (Latin American Integration Association), which, if successful, could open the way for future negotiations on a possible trade agreement between Havana and the Mercosur trade group. Copyright Financial Times Limited 1998. All Rights Reserved.

out a fifth is under exploitation. Cresud's strategy is to buy or lease land in different areas so as to spread the risk from adverse weather conditions, using new technology and economies of scale to boost margins. "The average Argentine farm is about 500ha, whereas a Cresud farm is a minimum of 2,000ha," said Mr Alejandro Elsztain, chief executive officer. Its rapid expansion is based on a simple premise. World demographics and falling grain stocks, plus rising incomes and changing eating habits in areas such as south-east Asia, are set to increase demand for Argentine produce. The path for Cresud and other investors is eased by good land title records in agricultural areas and a long tradition of leasing. About a third of Argentine land under production is farmed by third parties. Leases can be agreed for any length of time and rents can even be pegged to a basket of commodity prices. Argentina also has a pool of well-trained agricultural specialists, and strong research and development. Export taxes have been abolished, as has the inefficient grain board which farmers were obliged to sell to. However, farmers still suffer from high property taxes levied by provincial governments and municipalities. The cost of capital has been decreasing, but remains high. Despite recent improvements, freight costs remain a burden. "Shipping produce 400km to a port costs $20 a ton. That's almost the same as from Buenos Aires to the US," said Mr McMaster. The privatised rail network is only just beginning to attract interest from big producers as a possible alternative to road transport. Despite these drawbacks, Mr Elsztain believes agriculture could once more become the great locomotive of the economy. But the industry looks as if it will be in fewer hands and under more professional management. "The days of owners just sitting in their Buenos Aires apartments while their ranches make them money are over," said one analyst. Copyright Financial Times Limited 1997. All Rights Reserved.

the rupiah would include and also enable financial intermediation in both rupiah and dollars. As a consequence, it is still unclear whether Indonesian authorities are willing to give up the power of monetary policy activism or to accept the possibility of an eventual dollarization of the economy. Most financial analysts have suggested that an Indonesian currency board might require very high interest rates. This assumes that in the case of a continuous run against the rupiah, the Indonesian monetary authority would imitate the monetary activism of Hong Kong, and thus prevent the high degree of dollarization that Argentina was willing to accept. The International Monetary Fund and the U.S. Treasury Department seem to suspect that the currency board is being proposed as a substitute for the reforms that President Suharto agreed to, rather than as a tool to facilitate those vital changes. These doubts, justified or not, greatly reduce the chances that the currency board will create credibility among international investors. Given its current situation, Indonesia does not appear to meet the conditions that determined the success of the Convertibility Law in Argentina. Still, considering the high risks faced by Indonesia today and given our experience in Argentina, I would dare to make what I hope is a constructive suggestion. The Indonesian government should now set aside the idea of implementing a Hong Kong-style currency board. Instead it should make additional efforts to convince domestic and foreign policy makers and investors that it is committed to implementing the economic reforms already agreed to with the IMF. It should firmly decide which banks are in condition to remain open and which should unquestionably be closed, a step that is critical for allowing and recreating adequate financial intermediation in rupiah and dollars. Of course, credit in rupiah should be financed with deposits in that currency while credits in dollars with dollar deposits, limiting the currency risks that financial institutions can take in either of the two monies. At the same time, Indonesia should invite the IMF, the U.S., Japan and possibly Singapore to discuss a mechanism to stabilize the value of the rupiah at the lowest possible interest rate. My prediction is that within a few weeks, such talks would produce a plan not terribly unlike the Argentine Convertibility Law. The technical name given to the mechanism is irrelevant. In fact, in Argentina and abroad the "Argentine currency board" came to be known as such three years after the new monetary system was set in place. Much more important than the name is achieving the minimum consensus necessary to make it credible. What is most clear is that the stabilization of the rupiah should help accelerate, never prevent, the financial and economic reforms that Indonesia so urgently needs. Mr. Cavallo, a former minister of economy, public works and services of Argentina, is publisher of the new Forbes Global Business & Finance magazine.

___ Document 309 of 400 The Americas: Goodwill--and a group of islands Author: Anonymous Publication info: The Economist 349.8091 (Oct 24, 1998): 35. http://search.proquest.com/docview/224099044?accountid=28034 Abstract: When he arrives in Britain on October 27, Carlos Menem will be the first Argentine president officially there since the 1960s. Goodwill has grown vastly since the two countries went to war over the Falkland Islands in 1982. Menem meets with Queen Elizabeth and her prime minister, Tony Blair, and many of his ministers - notably those of defense, economy, foreign affairs and education. The themes will be reconciliation and the strengthening of economic links. However, over the Falklands there is a deadlock. Britain refuses to negotiate, against the urging of the UN's decolinisation committee. Full text: Headnote Argentina and Britain WHEN he arrives in Britain on October 27th, Carlos Menem will be the first Argentine president officially there since the 1960s. Goodwill has grown vastly since the two countries went to war over the Falklands Islands (to Argentines, the Malvinas) in 1982. But all kiss-and-make-up it is not-and Argentina's Congress has not recently been helping that way. Few Britons take much note of Argentina, except on the football field and at "Evita". But there has long been a love-hate relationship the other way. For Britons, the Falklands war was a nasty incident, successfully concluded, that happened 16 years ago. For Argentines, British rule in the islands is a long-standing, unhealed injury, a theft of their national territory. And the war, which claimed over 1,000 lives, remains a vivid and bitter memory. Yet the long relationship between the two countries ensures that resentment in Argentina is mixed with fascination. Argentina owes much to British capital and British settlers, not least its 19th-century railways and the port of Buenos Aires (and warships, from those of that day to the-now mothballed-aircraft carrier that the British chose not to go after in 1982). It owes football too, and today's regular victories over the one-time masters arouse immense pride. British-taught rugby football, British culture in general and (more widely) British pop-groups, all h

___ Document 282 of 500 The Americas: Argentina's monetary policy lesson for Mexico Author: Dornbusch, Rudi Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 28 Feb 1997: A, 15:3. http://search.proquest.com/docview/398567407?accountid=28034 Abstract: Rudi Dornbusch credits Argentina's hard-money policy for six years of annual growth in the 5% range. Dornbusch compares Argentina's story to the experiences of other countries in the region--like Mexico--that have not been forced to recognize the importance of fiscal and structural reform. Full text: Ever since Argentina got its new currency in 1991, a dramatic change has taken place. In the 1980s Argentine output shrank almost 0.5% per year; in the past six years annual growth has been in the 5% range. Argentina is the only country that today enjoys both price stability and vigorous growth. Over the years, Argentina has experimented with both good and bad monetary policies. Now even casual observers can see that hard money is the hands-down winner. With this evidence, it's instructive to compare Argentina's story with the experiences of other countries in the region that have fiddled with currency experiments but, lacking the discipline brought about by a law, have not been forced to recognize the importance of fiscal and structural reform. The Argentine Convertibility Law gives the country no choice but to adjust prices and competitiveness to the currency. "Argentineans are always in trouble about their currency," Bankers Magazine wrote in 1889. "Either it is too good for home use, or as frequently happens, it is too bad for foreign exchange. Generally they have too much of it, but their own idea is that they do not have enough. The Argentineans alter their currency almost as frequently as they change their finance ministers. No people on earth has a keener interest in currency experiments than the Argentineans." A few years later Finance Minister Ernesto Tornquist put Argentina formally on a gold standard, limiting the issue of money to the holdings of the treasury, thus stabilizing currency. That's when Argentina became, for a while, one of the leading economies in the world. "In consequence of this law, gold poured into the treasury in quantities which far surpassed the most optimistic anticipations," according to "Economic Development of the Argentine Republic in the Past 50 Years," publ

___ Document 287 of 400 CORPORATE CULTURE Corruption still saps economic potential Author: Fidler, Stephen; Warn, Ken Publication info: Financial Times [London (UK)] 01 July 1997: 03. http://search.proquest.com/docview/248407725?accountid=28034 Abstract: None available. Full text: * by Stephen Fidler and Ken Warn Corruption still saps economic potential Opinion polls say graft is the second-biggest problem, after unemployment As the daily headlines in the Argentine newspapers amply demonstrate, the long-standing issue of corruption in government remains a powerful and important one. Government is smaller now, thanks to privatisation, but it is not yet obvious that private sector behaviour has improved. Indeed, business practices among many companies remain questionable. " Menem has privatised corruption," says Mr Luis Moreno Ocampo, lawyer and anti-corruption consultant. Journalists and others say it is common practice for companies to pay journalists to ensure favourable coverage of their organisations. Meanwhile, there are examples of managements misleading shareholders over issues such as the price paid for minor acquisitions. Unlike government corruption, it is less clear that this is an issue of public policy. Stronger corporate governance and greater transparency in the publication of accounts would help. Similarly, where management is defrauding shareholders, cases could be resolved in the courts. Argentina is nowhere near creating the kind of strong shareholder culture that has developed in the US, while the courts are widely seen as unreliable and many judges themselves open to bribes or political pressures. One question is the extent to which the increasing economic integ

___ Document 431 of 600 Minister quits in Argentina NEWS DIGEST: Author: Warn, Ken Publication info: Financial Times [London (UK)] 05 Dec 1997: 03. http://search.proquest.com/docview/248508650?accountid=28034 Abstract: Armando Caro Figueroa, Argentina's labour minister, resigned yesterday, opening the way for cabinet changes in the wake of the ruling Peronist party's defeat in October's mid-term elections.

ome 800m people and a value of $10,000bn. * Forging stronger trade links with Europe. Formal trade negotiations between the EU and Mercosur are expected to begin next year, possibly kicking off at the Rio Summit which will bring together EU and Latin American heads of state. * Backing the Millennium Round of trade negotiations under the auspices of the World Trade Organisation. The round, originally proposed by EU trade commissioner Sir Leon Brittan, would follow on from the successful 1986-93 Uruguay Round and tackle remaining industrial tariff, investment and competition issues. On the bilateral front, some Argentine officials believe they can work successfully with Britain to push forward a broad trade liberalisation agenda in international negotiations. Underpinning Buenos Aires' trade agenda are improved market access for Argentina's agricultural exports and the dismantling of agricultural subsidies. Argentina's commitment to Mercosur has only been enhanced by Mr Clinton's failure to secure fast-track negotiating authority from Congress for the FTAA process. Detailed talks on creating the FTAA got off to a gruelling start in Buenos Aires last month. However, the negotiating committee of vice-ministers of 34 countries of the Americas (excluding Cuba) agreed guidelines for the nine working groups which will thrash out the details of the deal, starting in Miami in September. Lack of fast-track has strengthened the hand of Mercosur negotiators. Argentina and Brazil saw off a US-led initiative to allow for early implementation of any aspects of the FTAA accord that could be reached before the 2005 deadline. Argentina has also warned the US bluntly that the absence of fast-track would soon start to impact on the talks. "If we don't have fast-track by the end of this year or early next, the process will begin to stall," says Mr Di Tella. In this context, lingering US hopes of picking off Mercosur members one by one, rather than negotiating with a united and confident regional grouping, look difficult to achieve. "Mercosur and the FTAA are not incompatible. But Mercosur will negotiate the FTAA as a block," says Jorge Campbell, secretary for international economic relations. Copyright Financial Times Limited 1998. All Rights Reserved.

irector at Deutsche Bank Securities SA. "Today, Argentine companies either trade, invest or do joint ventures with Brazil. [A devaluation] would have a devastating effect on the Argentine" economy. The lightning rod of pessimism so far has been the Argentine stock market, which fell last week to lows unseen in three years. But Mr. Dougall thinks Argentine companies have yet to adjust to the effects of a possible Brazilian slowdown. Brazil absorbs a third of Argentina's exports, including the majority of its auto exports. Some of the goods, such as oil, could be redirected to other markets. But other industries will have a difficult time replacing Brazilian consumption. "If Brazil stops buying our autos, we won't be able to sell them to anybody," says Hernan Lacunza, economist at Fundacion Capital, an Argentine think tank. Textile companies would also suffer, Mr. Lacunza says. An executive at a shoemaker here, which exports about a fourth of its annual sales to Brazil, says many of its products would be priced out of the market in the event of a Brazilian devaluation. Argentine officials are cautious about predicting how Mercosur will negotiate trade issues in the event of a drastically cheaper Brazilian currency. "Competitive devaluations aren't good for anybody" because of the economic chaos they create, says Jorge Campbell, Argentina's secretary for international economic relations. He says the two countries haven't discussed compensatory mechanisms; however, the secretary of industry said last week that consultations with Brazil on trade issues are under way. "Mercosur is very flexible," Mr. Campbell said. Mr. Leone, the chief executive at steel maker Acindar, says the company's specialized products don't have many competitors, so sales to Brazil shouldn't suffer too much. The bigger worry is that a Brazilian recession will slow growth in Argentina and other important regional markets. "We were estimating growth for next year of about 3% to 4% for Argentina," Mr. Leone says. Given the likelihood of continued volatility in Brazil, "we think that now we will have growth of zero." --- Michael Allen in New York contributed to this article. Credit: Staff Reporter of The Wall Street Journal

tal remains. It faces debt amortisations totalling $11.5bn next year, while the 1999 fiscal deficit was last week forecast at some $2.65bn by Miguel Kiguel, financing undersecretary. Without a relatively rapid resumption of commercial lending, helped along by a convincing adjustment package in neighbouring Brazil, more funding will need to be found to bridge Argentina's financing gap. The package unveiled by Mr Fernandez consists of: * "Rapid disbursement" loans totalling $2bn each from the World Bank and Inter-American Development Bank (IADB). The loans, agreed in principle, are expected to be approved soon by the organisations' boards. * The proceeds from a planned series of 30-year bond issues aimed at domestic financial institutions. The issues are expected to raise up to $1bn by the end of the first quarter, with a further $1bn during the rest of 1999. * Some $700m in funding agreed with local and domestic commercial banks, whose identity officials have declined to specify. In addition to the package, the World Bank and IADB staffs have recommended approval of loans totalling $1bn to back the country's contingent "repo" facility, a line of credit which the central bank maintains with international banks. While Argentine officials insist that the $5.7bn package is precautionary and that they hope for an early re-entry into the capital markets, they are working overtime to line up further finance from a variety of sources. They are believed to be pushing for a further $2.4bn from the multilaterals - including the World Bank, IADB, and the US and Japanese Eximbanks - to extend financing cover to the middle of next year. Conversations are also taking place with European governments, and Japan, which could provide funding that would help push the crunch date fo

he planned issue follows long discussions with the pension funds, known as AFJPs, which have amassed an investment portfolio of more than $9bn and have monthly inflows totalling $300m. Argentina is seeking to raise $2bn to complete its 1998 financing programme and a further $3.7bn to cover needs up to the end of the first quarter of next year, as insurance against international capital markets remaining shut off. A package of loans from the World Bank, Inter-American Development Bank and other multilateral lenders is expected to be finalised during or shortly after the IMF/ World Bank gathering. Argentine officials say they have no plans to draw down any of the $2.8bn IMF facility, which remains "precautionary". Michel Camdessus, IMF managing director, said on Thursday that "in many respects the experience of Argentina in recent years has been exemplary.." He singled out banking sector reform and fiscal discipline as the economy's key strengths. The forthcoming bond issue echoes the $2bn "Patriotic Bond" launched during the 1995 "tequila crisis" in which Argentina's private sector showed its willingness to support the government, even during a full-blown banking crisis.

y have been busy lobbying U.S. and Argentine officials, including President Carlos Menem. Last year, Mr. Cheek also lobbied here on behalf of AMR Corp., parent of American Airlines, before its purchase of a stake in former state-owned carrier Aerolineas Argentinas. Last month, it was Mr. Todman who explained to Argentine politicians and media owners a $605 million deal by a U.S. investor-backed local buyout firm called Exxel Group. Mr. Todman is a director of Exxel, which bought two companies that, in the past, have been linked to Alfredo Yabran, a local businessman accused by former economy minister Domingo Cavallo of being an organized-crime boss. Mr. Yabran, who denies any wrongdoing and hasn't been convicted of any crimes, is suing Mr. Cavallo, alleging libel. Separately, Mr. Cheek has taken on advisory work for another company that previously was linked to Mr. Yabran. The company, printer Ciccone Calcografica SA, is part of a group bidding on the $600 million-plus contract to computerize registries of all Argentine residents and visitors and to print and distribute identity cards. Mr. Cheek, who during his stint here pushed for beefed-up border controls to combat transnational crimes such as drug trafficking and terrorism and was a frequent critic of Mr. Yabran, says he helped Ciccone last year on matters unrelated to the registries job. Although Messrs. Cheek and Todman have taken pains to emphasize they no longer represent the U.S. government and have endlessly noted that none of this work is illegal under U.S. laws governing retired executive-branch officials, their high profiles here have raised eyebrows. Former President Raul Alfonsin accuses them of "wanton influence peddling" while center-left opposition Congressman Juan Pablo Cafiero says he considers their activities "shameful." The U.S. embassy, which has been without an ambassador since Mr. Cheek's departure, has kept a polite distance. Little Rock, Ark., Native Mr. Cheek says the recent emphasis placed by Washington on expanding global trade and investment ties means such work is natural for a retired diplomat. "Ambassadors who have a reputation for forceful advocacy of U.S. business interests are sought after when they retire," says th

ration of Argentina with the rest of the world has reduced the tendency towards corruption. Argentine companies listed in the US should, in theory anyway, be subject to greater scrutiny and be forced to reveal more to shareholders about their activities. Foreign companies, increasingly large investors in Argentina, also have the potential to influence Argentina's business practices. US companies, for example, are forbidden by law to engage in corruption abroad. However, the extent to which they have influenced Argentine practice is debatable. Many companies pay fixers to resolve bureaucratic wrangles, some avoiding asking too closely what they get up to. Every visiting US official presses home the message that corporate corruption saps away at Argentina's economic potential. But ironically, Argentina's biggest single corporate corruption case involves the local office of IBM , which stands accused of arranging a bribe of up to $37m to secure a $249m contract with the state-owned Banco Nacion . A federal judge investigating the case has ordered the arrest of former IBM Argentina and Banco Nacion officials, including the two organisation's former presidents, on bribery charges. IBM acknowledges management failures in its Argentina operation, but denies offering bribes. The judge says he is determined to see the case through, although the decision whether to proceed rests with his superiors. If the case ever comes to trial it would send a powerful signal about the functioning of Argentine justice. Many other high-profile cases never get beyond the early stages and are quietly dropped. Argentina may ultimately be able to strengthen its justice system - after all, in the past two decades it ha

___ Document 588 of 600 $3bn Argentine loans agreed: World Bank seeks to safeguard 'social and economic achievements' Author: Warn, Ken Publication info: Financial Times [London (UK)] 12 Nov 1998: 07. http://search.proquest.com/docview/248716063?accountid=28034 Abstract: The World Bank has approved $3bn in emergency loans "to safeguard Argentina's social and economic achievements" in the face of the continuing international financial uncertainty. A $2.5bn special structural adjustment loan is aimed at boosting confidence in the banking system, developing the local capital markets, and expanding access to credit, especially for small and medium-sized businesses, the World Bank said. A separate $500m special repurchase facility is intended to back the liquidity of the financial system and bolster its defences. Both loans, unveiled on Tuesday night, were precautionary, the Bank said, and part of wider efforts with the International Monetary Fund and Inter-American Development Bank to soften the impact of the market crisis on Argentina. Full text: The World Bank has approved $3bn in emergency loans "to safeguard Argentina's social and economic achievements" in the face of the continuing international financial uncertainty. A $2.5b

ntina's access to commercial borrowing is likely to remain severely constrained. "It's safe to assume that until the beginning of next year at the earliest Argentina will be unable to issue bonds on the same scale as before," said Alberto Ades, Goldman Sachs emerging markets currency economist. "They just can't launch a single issue of, say, $1bn right now. Investors are just sitting on their cash." The country already faces a 1999 financing requirement of about $14bn, while tax revenues are likely to fall below target because of the economic slowdown. In its efforts to halt financial "contagion" in Latin America, the World Bank continued to lavish praise on Argentina. "As one of Latin America's most successful reformers, Argentina has achieved price stability, opened its borders to trade, privatised public enterprises, restructured public administration, reformed the pension system and has started the process of restoring social services," it said. "Argentina is now refocusing on investment in human capital, improved regulation, modern financial market supervision, and quality public administration and governance," said Myrna Alexander, World Bank director for Argentina. Copyright Financial Times Limited 1998. All Rights Reserved.

s both secured democracy and opened its economy to the world. Judges were held in relatively high esteem in the early days of democracy and some at least among their number are seeking ways of recapturing that lost respect. "Justice will change because judges will change, and they will change because of changes in the political context," says Mr Rosendo Fraga a political analyst. "Ultimately, judges will want to show that they are more independent." But when crime and dishonesty is as pervasive as it is in Argentina, "strengthening the judiciary is not enough," says Mr Moreno Ocampo. In an effort to improve business ethics, he is promoting a system of "integrity pacts," in which companies build into contracts a clause explicitly ruling out corrupt practices. They must also agree to open up their records and to denounce any attempted corruption during the contract tender or negotiation. Information can also be a powerful tool. Simply collating and publishing information on the prices paid for supplies by public hospitals has shown wide price differentials for the same products, highlighting possible corruption, or at the very least inefficiencies, says Mr Moreno Ocampo. Opinion polls show that voters believe corruption is Argentina's second-biggest problem, after unemployment. But much corruption is small-scale, typically involving a junior official or employee who requests a small payment or favour for easing the path of a negotiation. The pervasive culture is one of "you scratch my back and I'll scratch yours." Corruption is mainly about ordinary people. "It doesn't usually mean coming up against the Mafia," said one analyst. Copyright Financial Times Limited 1997. All Rights Reserved.

t been expected until year end, is designed to bolster confidence in Argentina's fixed-exchange-rate regime, similar to one that has come under assault in Hong Kong. In an interview with foreign reporters yesterday, Economy Minister Roque Fernandez said he was confident Argentina could defend its peso, which has been pegged one-to-one to the dollar since 1991 and which already withstood brutal pressure after Mexico's sudden peso devaluation in late 1994. "We aren't going to bend to a speculative attack," he said. "Our position is solid." In a vacuum, Argentina's position does indeed look solid. Gross domestic product growth, boosted by strong direct investment flows, is expected to reach 8% this year. The central bank's foreign-currency reserves are healthy. And the banking system, the Achilles' heel of the U.S. dollar-peso peg in the last financial crisis, has been bolstered by a huge influx of foreign money. What's more, Mr. Fernandez and his team are battle-tested. When speculators bullied the Argentine peso in early 1995, the government increased interest rates and taxes, cut government spending and raised billions of dollars in emergency financing. The result was a year-long recession and still-high unemployment. But the peso held. The maintenance of confidence this time around, however, has less to do with

___ Document 308 of 400 Argentina growth boost AMERICAS NEWS DIGEST: Author: Warn, Ken Publication info: Financial Times [London (UK)] 25 June 1997: 05. http://search.proquest.com/docview/248361458?accountid=28034 Abstract: None available. Full text: Argentina growth boost Argentina's industrial production rose 6.2 per cent in May year-on-year, providing further evidence that the economy will grow at the fastest rate anywhere in Latin America this year. The state statistics bureau,

the works, follows the French retailer's purchase of a 49% stake in Exxel Group's Supermercados Norte SA in September for $420 million. That deal showed how valuable supermarket properties had become to strategic buyers and proved to be a home run for Exxel, which purchased Norte only two years earlier for $380 million. Rising incomes, easing inflation and economic stability in South America's largest economies has set off a battle for market share among supermarkets in the region. Privately held, family-run chains such as Tia are selling to larger buyers, who are trying to capture new brands, formats and location. Analysts at Robert Fleming Inc. in New York said the combined Argentina market share of Tia and Norte would reach 16.7%, putting the group ahead of another French chain, Carrefour, which would rank second with market share of 13.7%. Combined sales of Tia and Norte would total more than $2 billion, analysts say. The acquisitions and mergers have sparked controversy. Last month, the majority shareholders of Argentine grocer Disco SA announced a tender offer for the publicly held

___ Document 498 of 600 Alliance begins charm offensive NEWS DIGEST: Author: Warn, Ken Publication info: Financial Times [London (UK)] 14 Nov 1997: 05. http://search.proquest.com/docview/248481545?accountid=28034 Abstract: An Alliance delegation will next week visit Washington, New York and Frankfurt. It will include, for differing legs of the visit, Fernando de la Rua, the mayor of Buenos Aires city, and Graciela Fernandez Meijide, the Alliance's triumphant candidate for deputy in Buenos Aires province. Full text: Argentina's Alliance opposition is mounting a "charm offensive" among international investors to

___ Document 93 of 400 Argentina to remain steady EMERGING MARKET FOCUS: Author: Warn, Ken Publication info: Financial Times [London (UK)] 19 Sep 1997: 34. http://search.proquest.com/docview/248589152?accountid=28034 Abstract: Buenos Aires' stock market has so far shrugged off a possible government defeat in next month's mid-term elections. With economic growth of 7 per cent in the first half of the year, and the opposition backing the main planks of government economic policy, investors seem to harbour few immediate local worries. Neighbouring Brazil can also send shivers down Argentine spines. Argentina has bitter memories of the "Tequila effect", the wave of regional financial instability that followed Mexico's surprise December 1994 devaluation. Now traders have their fingers crossed that Brazil, the destination for 30 per cent of Argentina's exports, will not be forced into a sudden devaluation. Turbulence in south-east Asian markets have added to Argentine anxiety over its giant neighbour. Full text: Buenos Aires' stock market has so far shrugged off a possible government defeat in next month's mid-term elections. With economic growth of 7 per cent in the first half of the year, and the opposition backing the main planks of government economic policy, investors seem to har

___ Document 492 of 500 Argentine Budget, President's Vows Clash --- Wall Street Hopes His Promises Are Just Politics Author: By Jonathan Friedland Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 18 Sep 1997: A11. http://search.proquest.com/docview/398616812?accountid=28034 Abstract: Over the past few days, Argentine President Carlos Menem has vowed to raise teachers' wages, boost pension payouts and give a big tax break to small businessmen. That's why Wall Street economists are keeping their fingers crossed that Mr. Menem's pledges are aimed at generating a quick boost for his Peronist Party ahead of next month's congressional elections rather than signaling a shift in Argentina's generally cautious fiscal stance. What's clear, according to Mr. Freisinger and other economists, is that Argentina doesn't have room to jack up spending even though its economy is expected to grow by 7% or more this year and 6% next year. Indeed, on Wednesday, the International Monetary Fund substantially raised its projection of growth in Argentina's 1997 gross domestic product to 7.5%, from its May estimate of 5%, though its revised estimate was put together before Mr. Menem's latest economic pronouncements. Full text: BUENOS AIRES -- Over the past few days, Argentine President Carlos Menem has vowed to raise teachers' wages, boost pension payouts and give a big tax break to small businessmen. Problem is, the 1998 budget presented by his government Monday doesn't take any of this into account. And if it had, the $48.6 billion budget wouldn't have been accep

s analyst. With 400 troops in Cyprus, 120 in Haiti and 900 in Bosnia, Argentina is the most active Latin American country in United Nations peacekeeping operations. It was the only Latin American nation to participate in the 1991 Gulf War, and this February stood ready to participate in a fresh US-led strike against Iraq. Last year, Argentina won its reward when Washington approved its claim to be designated as special non-Nato ally. The move has already boosted co-operation in areas such as training and could give Argentina access to surplus Nato hardware. It may also help win US congressional approval for purchases of US weaponry by Argentina's cash-strapped armed forces. "Special non-Nato ally status is largely symbolic, but it does indicate how well the relationship with Washington is going," says Diego Guilar, Argentina's ambassador to the US. Symbolic or no, the move drew criticism from neighbouring Chile and Brazil, who claimed it could upset the regional balance of power. Nowhere is the changed dynamic of Argentina's foreign relations more apparent than in international trade negotiations. Forthcoming trade talk commitments are so great that Argentina is at serious risk of running out of experienced trade negotiators. Argentina is committed to: * Talks aimed at deepening Mercosur, the customs union which also includes Brazil, Uruguay and Paraguay, with Chile and Bolivia as associate members. Argentina's trade with Brazil has soared since the formation of Mercosur, and Brazil takes almost a third of its exports. * Moving towards more co-ordination of regional economic policies, This is the main task ahead, according to Argentine negotiators. Mercosur partners are still prone to act as sovereign states first, and members of an emerging economic block a distant second. However, moves to create a common Mercosur currency, heavily promoted by Mr Menem and Argentine officials, have been stifled by Mercosur partners. * Forging a free trade agreement between Mercosur and the Andean Pact - an older trade grouping which comprises Venezuela, Colombia, Ecuador, Peru and Bolivia - by 2000. * Participation in President Bill Clinton's ambitious project to create a Free Trade Area of the Americas by 2005. The FTAA would create a market of s

___ Document 486 of 600 Argentina keeps eye on Brazil EMERGING MARKET FOCUS: Author: Warn, Ken Publication info: Financial Times [London (UK)] 21 Nov 1997: 34. http://search.proquest.com/docview/248510583?accountid=28034 Abstract: "The stock market is down," trumpets a new billboard in downtown Buenos Aires. "And so is the cost of developing your photos!" That must seem like poor compensation to investors who have seen almost a third of their wealth wiped out by the recent slide in share values. Fears of a slowdown at home and a recession in Brazil, Argentina's biggest trading partner, have hit shares in the auto, construction and banking sectors. Some carmakers are already laying off workers in the expectation of lower exports as last week's Brazilian austerity package starts to bite. Unfocused fears of events in Asia have added to the nervousness. Since the market took its initial tumble last month it has struggled to stage a durable rally, oscillating from day to day in thin volumes. On Tuesday, the Merval index of leading shares slipped 1.8 per cent, taking its accumulated fall since October 22 to more than 30 per cent. Full text: "The stock market is down," trumpets a new billboard in downtown Buenos Aires. "And so is the cost of developing your photos!" That must seem like poor compensation to investors who have seen almost a

ent mechanisms for $1.68bn of Cuban debt with initiatives to boost trade and investment ties. The package was presented yesterday to Francisco Soberon, Cuban central bank president, by an Argentine delegation led by Jorge Campbell, secretary of state for international economic relations. "We are looking for mechanisms that will allow the debt to stop being an obstacle to economic relations and will make it instead into a means of promoting such relations," Mr Campbell said. "But it won't be short-term. It will be complex." The Argentine proposal contained "a menu of options" whose aim would be to reschedule the Cuban debt, at the same time linking repayment to possible investment projects in Cuba and increasing two-way trade. Argentina, whose President Carlos Menem has called for democratic change in communist-ruled Cuba, has recently lagged behind other Latin American countries such as Mexico and Venezuela in its trade ties with Havana. Argentine-Cuban trade in 1997 totalled $132m, most of it Argentine exports. Sergio Plasencia, a vice-president at the Cuban central

decree. He also crossed swords last month with Roque Fernandez, economy minister, by warning that slower economic growth next year would hit job creation. Frontrunner to succeed Mr Caro Figueroa is Antonio Erman Gonzalez, currently ambassador to Italy and a former economy and defence minister. He is a long-time confidant of President Carlos Menem. Ken Copyright Financial Times Limited 1997. All Rights Reserved.

Full text: Armando Caro Figueroa, Argentina's labour minister, resigned yesterday, opening the way for cabinet changes in the wake of the ruling Peronist party's defeat in October's mid-term elections. Mr Caro Figueroa, who has not attended recent cabinet meetings, has taken much of the blame for lack of progress on labour reform. He angered unions this year by threatening renewed efforts to impose reforms by

another advantage of building a factory in Argentina will be more secure local customer orders, Mr Peres says. The Argentine market is less developed than Brazil, he says, although it is becoming more competitive, particularly since several Chilean companies have invested in the country. The group will examine the performance of the Argentine plant to see if it might invest in extra facilities for other products. There is plenty of land available at the Pilar site for further development, Mr Peres says. However Klabin is also considering other investment opportunities in the north-east of Brazil, which puts it at the forefront of one of Mercosur's thorniest issues. Brazil's Mercosur partners have complained about the subsidies which the Brazilian states offer for direct investment, and Argentina has been particularly angered by a series of incentives offered to carmakers to build factories in Brazil's north-east. Klabin already has a small plant in the north-eastern city of Recife and is examining the possibility of building another one there. Mr Peres points out that while the group will receive little in the way of incentives for building a plant in Argentina, in Recife it receives a number of state and federal government tax breaks. Geoff Dyer Copyright Financial Times Limited 1997. All Rights Reserved.

m. Economy ministry officials also said they would be cutting next year's growth forecast from the 4.8 per cent contained in the budget to about 2.5-3 per cent - still in excess of most private sector forecasts. An IMF mission in Buenos Aires is this week due to complete the second revue of Argentina's compliance with the three-year $2.8bn extended fund facility agreed early this year. Argentine officials maintain the deficit overshoot results from the international financial crisis and not mismanagement, a view likely to be shared by the IMF board. Revenues have f

rward towards the end of 1999. Further forays could also conceivably be made into the domestic market, although the government has always been reluctant to tap the domestic banks for funds and risk crowding out the private sector. Some Argentine companies are already seeking bridging finance from local and international banks to fund forthcoming borrowing maturities. Other options include drawing down part of Argentina's $2.8bn extended fund facility with the IMF, a move the authorities would be reluctant to make except in extreme circumstances. Drawing on the "repo facility" is also considered off-limits. "If Argentina uses up its credit lines with the multilaterals, and access to external finance is not forthcoming, they have got to tighten further fiscally," said Alberto Ades, emerging markets currency economist at Goldman Sachs. "Continuing constraint on access to international finance means sharp economic slowdown, but at least as growth slows Argentina is going to see some relief on the current account front," he added. There are already signs fresh cuts are being planned on top of the $1bn lopped off proposed government expenditure earlier this year. Argentina has some flexibility - for now. But returning to the capital markets remains crucial for the country, long one of the most innovative borrowers in the bond markets, with a strong track record of exploiting niches and stretching out debt maturities. It can be expected to be among the first emerging market borrowers to tap the bond markets, if and when a semblance of stability resumes. "If in a few months Argentina still can't access the markets, then it's going to look real grim for all emerging market borrowers," said one local analyst. Copyright Financial Times Limited 1998. All Rights Reserved.

entina's main business groups and their foreign partners, mostly in modest deals that barely warrant a headline. The flurry of activity reflects the realization that companies can't remain broadly diversified and still compete effectively in an open economy. Argentine conglomerates "are starting to focus on the areas where they have comparative advantage," says business consultant Carlos Tramutola. "Most of them now have what you'd consider a core business." That's something new. In Argentina, as in many developing countries, companies have traditionally been in wildly diverse lines of business, partly to achieve the size needed to obtain financing and partly to offset the risks of economic ups and downs. The trend was accentuated here in the early 1990s when these companies bought -- in the hope they could later sell them at a big profit -- billions of dollars of assets sold by Argentina's government. That moment has arrived. Companies are taking advantage of buoyant stock prices -- the local Merval index is up 10.2% so far this year -- to realign often incoherent portfolios. On Thursday, for example, Organizacion Techint, the world's largest maker of steel pipes used by the oil industry, took profits on a sizable stake in Telefonica de Argentina SA it had picked up during the government fire sale. Eduardo Baglietto, Techint's executive vice president, says the group will reinvest the $240 million from the sale in its core businesses, which along with steel include energy and energy-related construction. Earlier in the week, the company announced it had upped its stake in local steelmaker Comeci SA. The buyer of Techint's stake, a unit of Telefonica de Espana SA, needed the shares to bring it back to parity with CEI Citicorp Holdings SA, Citicorp's local investment arm. CEI until recently held its own grab bag of privatized assets, ranging from a pulp mill to a gas distributor. But

arkets to a limited amount of Argentine beef - the first such sales in more than 60 years. The move would send a powerful signal to other consumers. "If we could export the planned 20,000 tons of beef to the US, it would open up Pacific Rim markets for us," said Mr Andrew Wrigley of agricultural real estate agents Madero, Lanusse, Belaustegui . Argentine beef, fed on grass, is protected from the scourge of BSE, while the industry's cost structure is unaffected by fluctuations in grain prices. The economy ministry predicts that meat exports will rise by more than 70 per cent from last year's levels to 800,000 tons by the year 2000. The turnaround in agriculture's prospects has not gone unnoticed by foreign investors. The attractions of vast and relatively cheap tracts of land have been boosted both by the opening of the economy and infrastructure improvements. Arable land prices have been rising strongly, but are still less than half US levels and a fraction of those in Europe. In the north, forestry has been attracting a lot of investor interest, particularly from Chile, said Mr Wrigley. The industry, with its long-term investment requirements, had been stunted by Argentina's high inflation. Chileans have also been moving into the fast-updating wine industry. Only Patagonia, traditional home of sheep farming, has been missing the new optimism, due to the continuing world slump in wool prices. The number of sheep has collapsed from almost 60m in the 1950s to about 14m today. Italian clothing manufacturer Benetton has bought land in Patagonia, but few others have followed. However, by far the best-known newcomer to Argentine agriculture is Mr George Soros , the Hungarian investor, whose Quantum Industrial Partners owns about 30 per cent of the agricultural company Cresud . The company, originally comprising seven farms totalling just 20,000ha, was taken over by a group of Argentine and international investors in 1994. Its properties now total more than 340,000ha, of which ab

___ Document 381 of 500 Argentina Moves Fast On Accord With IMF Author: By Jonathan Friedland Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 30 Oct 1997: A16. http://search.proquest.com/docview/398591452?accountid=28034 Abstract: Argentina is rushing to lock itself into a three-year agreement with the International Monetary Fund aimed at reassuring investors that its current economic policies are unshakeable. The announcement by authorities of a deal with the IMF, which hadn't been expected until year end, is designed to bolster confidence in Argentina's fixed-exchange-rate regime, similar to one that has come under assault in Hong Kong. In an interview with foreign reporters yesterday, Economy Minister Roque Fernandez said he was confident Argentina could defend its peso, which has been pegged one-to-one to the dollar since 1991 and which already withstood brutal pressure after Mexico's sudden peso devaluation in late 1994. "We aren't going to bend to a speculative attack," he said. "Our position is solid." Full text: BUENOS AIRES -- Argentina is rushing to lock itself into a three-year agreement with the International Monetary Fund aimed at reassuring investors that its current economic policies are unshakeable. The announcement by authorities of a deal with the IMF, which hadn'

e other hand, if you are looking to exit now your multiples are not the same as they once were." Goldman, Sachs has also begun stepping up its efforts in the region, investing $95m in Argentina in the last few months acquiring stakes in Abolio y Rubio dairy company and a string of shopping centres. "The bulk of the Argentine economy operates on a private basis, so if you want to diversify your portfolio you must tap into private equity," said Luis Blaquier, vice-president of the investment banking division of Goldman, Sachs. At $55bn Argentina's market capitalisation represents 16.7 per cent of gross domestic product, with the largest five companies representing more than half that amount. But while the stock market has dropped 30 per cent since the Asian crisis, economic growth has diminished only slightly to an estimated 6 per cent in 1998, from 8.4 per cent in 1997. Private equity investors are also encouraged by Argentina's open economy and per capita income of $9,000, the highest in the region. In return investors are making Argentine industries more competitive. "Foreign investment has caused a complete change in the entrepreneurial culture of Argentina by providing new technology, new markets and new management," said Alieto Guadagni, secretary of industry, trade and mining, at the conference. Copyright Financial Times Limited 1998. All Rights Reserved.

___ Document 248 of 600 Argentina says it has beaten Asian crisis ECONOMY EXPECTED TO GROW 6% IN 1998: Author: Warn, Ken Publication info: Financial Times [London (UK)] 11 Feb 1998: 04. http://search.proquest.com/docview/248524703?accountid=28034 Abstract: Argentina has already overcome the effects of the Asian financial crisis and its economy will grow strongly in 1998, Alieto Guadagni, industry secretary, said yesterday. Mr Guadagni said industrial production would grow by about 6 per cent this year, and the economy would continue to generate fresh jobs. Full text: Argentina has already overcome the effects of the Asian financial crisis and its economy will grow strongly in 1998, Alieto Guadagni, industry secretary, said yesterday. Mr Guadagni said industrial production would grow by about 6 per cent this year, and the economy would continue to generate fresh jobs. One of the main grounds for optimism was the fall in interest rates from their peaks immediately aft

third of their wealth wiped out by the recent slide in share values. Fears of a slowdown at home and a recession in Brazil, Argentina's biggest trading partner, have hit shares in the auto, construction and banking sectors. Some carmakers are already laying off workers in the expectation of lower exports as last week's Brazilian austerity package starts to bite. Unfocused fears of events in Asia have added to the nervousness. Since the market took its initial tumble last month it has struggled to stage a durable rally, oscillating from day to day in thin volumes. On Tuesday, the Merval index of leading shares slipped 1.8 per cent, taking its accumulated fall since October 22 to more than 30 per cent. However, the following day's 3.7 per cent surge propelled the Merval to an eight-day high of 620.88, which some analysts interpreted as a sign that the tide was turning. "The market looks like it is recuperating," said Christopher Ecclestone of brokers Interacciones . "But people are still feeling around in the dark and working out what the effect of things in Brazil is going to be." The AFJPs, Argentina's fast-growing private pension funds, were picking up some of the slack and buying their favourite shares as foreigners continued to exit the market, he added. Brokers have been mapping out defensive positions for clients. Caspian Securities

has urged investors to pull out of cyclical stocks, banks and any highly leveraged companies in favour of those with low debt and stable revenue streams. The Argentine market, dominated by the energy sector and utilities, is well supplied with companies that fit this bill. Argentine officials have also been talking up the Brazilian austerity plan's chances of success, and downplaying the extent of Argentina's dependence on its neighbour. Argentina, the argument runs, is not an export-oriented economy, and the share of exports which goes to Brazil is equivalent to less than 3 per cent of GDP. "Most of what Argentina does export, such as commodities, are things people need come hell or high water, and the overall economic prospects for next year remain good," said Mr Ecclestone. Although forecasts have been trimmed, most analysts are still assuming GDP growth of 4-5 per cent for Argentina next year. The fear, however, is that Brazil might not be able to hold the line and preserve its exchange rate regime, dealing a blow to foreign investors' confidence in the region. The Merval has shadowed Sao Paulo's Bovespa index almost slavishly since October 22. Breaking the link may prove difficult until the Brazilian market looks more confident, whatever the economic fundamentals. Ken Warn Copyright Financial Times Limited 1997. All Rights Reserved.

___ Document 46 of 400 Cavallo in drive to oust an old ally Author: Burns, Jimmy; Warn, Ken Publication info: Financial Times [London (UK)] 16 Apr 1997: 08. http://search.proquest.com/docview/248519762?accountid=28034 Abstract: None available. Full text: Mr Domingo Cavallo , Argentina's former economy minister, will today officially launch his campaign to win a seat in Congress in this October's mid-term elections. Mr Cavallo, sacked by President Carlos Menem last July, seeks to forge a new political alliance to back economic reform and tackle corruption. "Argentina is tired of Menem. His style of government is an anachronism," Mr Cavallo said in an interview with the Financial Times. "He provided leadership for the country's economic transformation, but there are many areas where he has not been active." In August 1995, Mr Cavallo launched a fierce attack in Congress on alleged links between government and organised crime. Since his departure from office, he has kept up a barrage of criticism. He has especially criticised the ground ru

___ Document 123 of 600 Argentina looks locally for funds FINANCING GAP SHUT OUT OF INTERNATIONAL MARKETS, THE COUNTRY IS EYEING OTHER SOURCES OF CASH: Author: Burns, Tom; Warn, Ken Publication info: Financial Times [London (UK)] 03 Oct 1998: 03. http://search.proquest.com/docview/248630883?accountid=28034 Abstract: Argentina aims to place 30-year bonds worth up to $2bn (£1.18bn) with local financial institutions to help bridge its financing gap for this year and next. Like other emerging emerging market borrowers, Argentina has been shut out of international capital markets by the global financial turmoil and has urgently been seeking other sources of finance. Argentina believes it has been a near model pupil of the IMF, meeting the first-half fiscal targets set under the terms of its $2.8bn extended fund facility, and striving, with partial success, to follow IMF prescriptions on structural reform. Full text: Argentina aims to place 30-year bonds worth up to $2bn (£1.18bn) with local financial institutions to help bridge its financing gap for this year and next. Like other emerging emerging market borrowers, Argentina has been shut out of international capital m

___ Document 271 of 400 Export boost urged on Argentina Author: Warn, Ken Publication info: Financial Times [London (UK)] 04 July 1997: 05. http://search.proquest.com/docview/248453080?accountid=28034 Abstract: None available. Full text: Argentina's economic development is being jeopardised by a lack of export policies, a Harvard economist has warned local bankers. Mr Jeffrey Sachs, best known for his work advising governments in Latin America and Eastern Europe, welcomed the country's recent economic performance, but said progress was not sustainable without a higher rate of export growth. "Where is the long-term export growth going to come from?" he asked in a speech to the Argentine bankers association this week. "If I were an official in a country so dependent on foreign capital, I would be worrying night and day about this

y bonds are derived from former distressed commercial debt re-issued as international bonds and backed up - or collateralised - by US Treasury bonds. As a result of the proposed swap programme, which could involve all $28.36bn of Argentina's Brady bonds, the country hopes to leave behind the stigma of being a troubled borrower on the international debt markets. "This is a very aggressive statement by Argentina," said a bond dealer in New York yesterday. "Argentina is saying: 'We are now a responsible international economy which investors can trust'." Argentina will become the fourth country with large issues of Brady bonds outstanding to undertake a large-scale retirement programme. J.P. Morgan , which will be sole bookrunner on the Argentinian deal, yesterday said that holders of Brady bond debt had until September 11 to accept the swap. Copyright Financial Times Limited 1997. All Rights Reserved.

___ Document 223 of 500 Brazil and Argentina, Long Rivals, Move Closer --- Economic Crisis Could Spark An Eventual Monetary Union Author: By Matt Moffett and Craig Torres Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 12 Nov 1998: A25. http://search.proquest.com/docview/398727848?accountid=28034 Abstract: SAO PAULO, Brazil -- The world is watching Brazil's back-to-the-wall struggle to rescue its economy, but no country more fretfully than neighboring Argentina. Long the fiercest of rivals, Argentina and Brazil cast aside their antagonisms to form an economic union, Mercosur, that in just seven years has become the world's third-largest economic bloc after the North American Free Trade Agreement and the European Union. Most economists on both sides of the border initially scoffed at the notion. But given Brazil's current difficulties, the debate over whether Brazil should try piggybacking on its neighbor's monetary policy has picked up steam, becoming the topic of countless seminars and editorial-page articles. That's especially true since Argentina has emerged, in the wake of the Asian economic crisis, as the most stable economy in Latin America, eclipsing the continent's traditional star, Chile. One reason: In 1991, Argentina made its peso interchangeable with the dollar through the creation of what economists call a currency board. By eliminating the government's leeway to print money, that policy effectively halted inflationary government overspending. Analysts such as Sebastian Edwards, a University of California at Los Angeles economist, said a regional currency board might serve as the prod Brazil needs to impose fiscal and monetary discipline on its own economy. "Give Brazil all the rest of the posts for Mercosur: chief trade negotiator, tax collector and even head soccer coach," he said. "But create a common currency board and let the Argentines run it." Full text: SAO PAULO, Brazil -- The world is watching Brazil's back-to-the-wall struggle to rescue its economy, but no country more fretfully than neighboring Argentina. Long the fiercest of rivals, Argentina and Brazil cast aside their antagonisms to form an economic union, Mercosur, that in just seven years has become the world's third-largest economic bloc after the North American Free Trade Agreement and the European Union. And while past economic emergencies have provoked frictions between the two countries, the Brazilian crisis seems to be propelling them toward what could turn out to be the most ambitious integration policy yet: an eventual monetary union. Argentine President Carlos Saul Menem first floated the idea nearly a year and a half ago. "Commerce between Argentina and Brazil has grown from around $2.5 billion a year to nearly $18 billion," he said. "Now we have to rapidly begin the creation of a common currency." Most economists on both sides of the border initially scoffed at the notion. But given Brazil's current difficulties, the debate over whether Brazil should try piggybacking on its neighbor's monetary policy has picked up steam, becoming the topic of countless seminars and editorial-page articles. That's especially true since Argentina has emerged, in the wake of the Asian economic crisis, as

___ Document 328 of 500 Rates Slow Auto Sector In Argentina And Brazil Author: By Craig Torres Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 17 Sep 1998: A17. http://search.proquest.com/docview/398641148?accountid=28034 Abstract: In Brazil, Ford Brasil Ltda., a division of Ford Motor Co., announced its third work stoppage for the year, saying it plans to idle 6,000 workers for 12 days. General Motors Corp.'s General Motors do Brasil Ltda. unit, also plans to idle 7,000 workers for 12 days in October. Italian auto maker Fiat SpA will suspend production at one of its Argentine plants for three days later this month because of sluggish market conditions in Brazil, company officials said this week. The suspension is the fourth since July. A slowdown in Fiat's Brazilian production has also been announced. Separately, the Argentine unit of French car maker Renault SA said yesterday it plans to halt production at one of its plants for three days because of weak demand from Brazil. Full text: BUENOS AIRES -- High interest rates are starting to slow Argentina and Brazil's auto sectors, one of the region's m

___ Document 501 of 600 Argentina poised to seek IMF waiver Author: Warn, Ken Publication info: Financial Times [London (UK)] 15 Dec 1998: 10. http://search.proquest.com/docview/248673615?accountid=28034 Abstract: Argentina looks set to seek a waiver from the International Monetary Fund after admitting it will overshoot its $3.5bn fiscal deficit target for this year by about $350m. Full text: Argentina looks set to seek a waiver from the International Monetary Fund after admitting it will overshoot its $3.5bn fiscal deficit target for this year by about $350

ost important motors of job creation and growth. In Brazil, Ford Brasil Ltda., a division of Ford Motor Co., announced its third work stoppage for the year, saying it plans to idle 6,000 workers for 12 days. General Motors Corp.'s General Motors do Brasil Ltda. unit, also plans to idle 7,000 workers for 12 days in October. Italian auto maker Fiat SpA will suspend production at one of its Argentine plants for three days later this month because of sluggish market conditions in Brazil, company officials said this week. The suspension is the fourth since July. A slowdown in Fiat's Brazilian production has also been announced. Separately, the Argentine unit of French car maker Renault SA said yesterday it plans to halt production at one of its plants for three days because of weak demand from Brazil. "This all began with the storm in financial markets during the month of August," Vincenzo Barello, president of Fiat Argentina SA, said in an interview yesterday. "There are complications with the cost of money." Interest rates in both countries are rising because of distinct reasons. In Argentina's dual-money banking system, where client

f Argentina's centrist Radical Party, handily defeated his leftist opponent, Graciela Fernandez Meijide, in the weekend primary staged by a coalition of opposition parties known as the Alliance. Analysts said the results show that Argentines don't want drastic changes with the free-market model endorsed by Mr. Menem; they just want it administered with greater transparency and honesty. "This is a vote that shows Argentines want to basically maintain what they have achieved," said Martin Redrado, president of Fundacion Capital, an economic think tank here. "There is no way back to the years of fiscal and monetary irresponsibility." Mr. de la Rua's Radical Party took a bad economy and made it worse in the 1980s by sustaining a bloated state with monetary expansion; that led to an inflation spiral that nearly destroyed Argentine industry. But the party has presented itself as highly ethical, and that has attracted voters exhausted by the murky scandals surrounding the Menem administration. The Alliance now leads the Peronist Party in the polls. Analysts add that the opposition has learned several lessons from Mr. Menem. The Alliance said last August that the anchor of the Menem model, a currency board system where all pesos in circulation are backed by dollars, must be maintained to "consolidate stability." While it is too early to say who Mr. de la Rua will choose as his economy minister, many analysts point to the business establishment's support for Ricardo Lopez Murphy, an orthodox economist from the Radical Party. "He is very tough in everything related to fiscal issues," says Pedro Lacoste, head of the Buenos Aires economics firm that bears his nam

sening trade situation, said Alberto Ades, emerging markets currency economist at Goldman Sachs: very strong investment growth, pulling in capital goods imports; lower world commodity prices; and the strong dollar. "Of the three, I would put least emphasis on the dollar." Almost 60 per cent of Argentina's exports are commodities-related. Of its main exports, wheat prices fell 45 per cent between May 1996 and December 1997 and soyabean prices 20 per cent between May and December 1997, according to Deutsche Morgan Grenfell. Devaluation would not change this international context - but it would send foreign investors fleeing for the exit. The trade deficit will ultimately prove self-correcting as foreign investment pays off in terms of increased exports, officials say. The worry would be if trade continued to deteriorate in the short term and Argentina was hit by a new external shock. But even then, officials argue, convertibility's defence mechanisms would kick in. Officials also maintain that the banking system is much stronger than it was in 1995, partly because of a wave of investment from deep-pocketed foreign banks. High bank liquidity requirements and a $7bn financial safety net negotiated with international banks mean Argentina could cover the outflow of 30 per cent of bank deposits, which now total about $73bn. Argentina could conceivably find a solution in the creation of a single currency for Mercosur, the customs union which also groups Brazil, Paraguay and Uruguay. Mr Menem has been the single currency's main backer, initially to the bemusement of other Mercosur members. However, Argentine officials say they have been pleasantly surprised by increased Brazilian receptiveness to the idea. Progress could be built on a Maastricht-style process of economic convergence which was totally transparent for the markets, advocates argue. However, work on the project is only just beginning, and sustained Brazilian enthusiasm is far from certain. In the meantime, Argentina's peso looks more than ever wedded to the dollar. Talk of divorce is anathema, and only the severest international financial turmoil could put the two asunder. Copyright Financial Times Limited 1998. All Rights Reserved.

, an independent economist, said the unemployment goal would be impossible to achieve, given the expected increase in Argentina's job pool and the economy's limited ability to absorb these workers at a 6% growth rate. "They have too many goals and they are not specific about the tools," he said. "If they want to build credibility, they will have to give more details." Nevertheless, Mr. Lacoste and other economists praised the general framework as sound economic policy. "The Alliance said: `We want convertibility [economic shorthand for Argentina's currency system, where the peso is fixed one-to-one with the dollar] to continue, and we want to maintain the rules of the game,'" said Raul Buonuome, chief economist at Deutsche Morgan Grenfell, Argentina. "This is absolutely timely, considering the condition of international markets." As in many emerging markets, Argentine stocks were pounded yesterday; the benchmark Merval stock index fell 4.4% to 489.66. "Convertibility" has reduced inflation to near zero, but it has also created high unemployment as exporters resorted to technology and other labor-saving investments to lower costs. Because exchange-rate policy is fixed, the Alliance focuses on other tools such as fiscal policy, regulation and use of state resources. The Alliance said it wouldn't privatize Argentina's largest bank, Banco de la Nacion, preferring to keep it as a state development bank. Credit: Staff Reporter of The Wall Street Journal

ch to dealing with nearly insolvent banks does not appear to have reduced the systemic risks," the report says. A deposit insurance fund has been created but contains only $700m, compared with deposits of about $67bn. A standby line of credit of $6.1bn has also been arranged by the government - but, says Mr Sarp, it is needed because of the short duration of deposits. The entry of foreign banks into Argentina has been positive, but the new entrants have often picked off the best banks, leaving weak domestic competition. The economy - and the banking system - remain vulnerable to volatility in the international capital markets, the report said. An economic crisis in Brazil economy would also severely affect Argentina. Copyright Financial Times Limited 1998. All Rights Reserved.

___ Document 116 of 400 Argentina's trade gap grows wider Author: Warn, Ken Publication info: Financial Times [London (UK)] 10 Sep 1997: 06. http://search.proquest.com/docview/248528494?accountid=28034 Abstract: Argentina has announced a sharp increase in its trade deficit, raising questions about the sustainability of the country's strong economic growth. Argentina ran a trade deficit of $518m (£320m) in July, against a surplus of $66m in the same month last year. The country has accumulated a trade deficit of $1.9bn in the first seven months of this year, against a surplus of $567m in the equivalent period of last year, according to official figures published on Monday night. July exports were down 3 per cent year-on-year to $2.2bn, while imports surged 17 per cent to $2.7bn. The worsening trade position, coupled with Argentina's fiscal deficit, has led some local commentators to question the solidity of the current expansion. Full text: Argentina has announced a sharp increase in its trade deficit, raising questions about the sustainability of the country's strong economic growth. Gross domestic product grew by 8 per cent in the first six months of the year, sucking in more

___ Document 337 of 600 Argentine banking system criticised Author: Fidler, Stephen Publication info: Financial Times [London (UK)] 14 Jan 1998: 03. http://search.proquest.com/docview/248563196?accountid=28034 Abstract: Argentina's banking system remains weak despite improvements to bank supervision and regulation since a 1995 crisis, according to a report published yesterday by the credit rating agency, Moody's Investors Service . The report says the system still suffers from poor disclosure standards and unreliable reporting of problem loans, one aspect of weaknesses that remain in the surveillance and the prudential supervision of the banking system. Full text: Argentina's banking system remains weak despite improvements to bank supervision and regulation since a 1995

y defeated the powerful ruling Peronist party for control of the congress, but almost no one challenged the model for price stability. In fact, political competition is likely to preserve stability by forcing even deeper reform. The Justicialist (Peronist) Party had held congressional power since 1989. Peronist President Carlos Saul Menem was re-elected for a second four-year term in May 1995, largely on the basis of his party's economic model -- price stability, deregulation, privatization and fiscal restraint. In the campaign there was almost no debate on the merits of that mix. Argentines understand that their currency-board-style monetary arrangement leaves them no quick fixes during times of economic contraction. The payoff of price stability, they've decided, is worth it. Even opposition candidates who tried to rail against "savage capitalism" embraced Menem economics. Instead, the opposition -- an alliance among the Frepaso and Radical parties -- attacked the ruling party's arrogance. The public widely perceives that the country's progress is undermined by government graft, organized crime, cronyism and a broken judicial system. Mr. Menem claimed there's nothing wrong with the judicial system and this wasn't the right time to take on corruption. This attitude clearly contributed to his party's defeat. It must be sweet revenge for Domingo Cavallo, formerly Mr. Menem's Minister of the E

to more global trade, privatized public enterprises, restructured public administration, reformed the pension system and has started restoring social services. One loan, worth $2.5 billion, will help meet the Argentine government's foreign-exchange needs and help shield the country from global financial instability, while its reforms continue. The second loan, worth $505 million, is intended to strengthen the banking system.

the most stable economy in Latin America, eclipsing the continent's traditional star, Chile. One reason: In 1991, Argentina made its peso interchangeable with the dollar through the creation of what economists call a currency board. By eliminating the government's leeway to print money, that policy effectively halted inflationary government overspending. Analysts such as Sebastian Edwards, a University of California at Los Angeles economist, said a regional currency board might serve as the prod Brazil needs to impose fiscal and monetary discipline on its own economy. "Give Brazil all the rest of the posts for Mercosur: chief trade negotiator, tax collector and even head soccer coach," he said. "But create a common currency board and let the Argentines run it." As a first step down that path, Juan Llach, Argentina's former vice minister of economy who now runs an influential think tank, is pushing a proposal for Mercosur to negotiate an agreement similar to the European Community's Maastricht Treaty. That accord laid out specific targets for public debt and deficits, in order to nudge inflation and interest rates toward convergence. "This is a fundamental first step to start thinking about monetary union," he said. Mr. Llach said that even though it is a midterm project, some of the benefits would be immediate. By merely stating its commitment to macroeconomic convergence, Mr. Llach said, Brazilian policy makers could take an important step toward restoring confidence in their embattled economy. Many Brazilians said such talk is premature given the gravity of their country's immediate problems. "It's impossible to talk about a common currency when Brazil has so many domestic distortions, including a deficit of 8% of GDP," said Igor Cornelsen, a Sao Paulo investment banker. Mr. Cornelsen, like many Brazilians, has another problem with the idea: He tends to be more supportive of a flexible exchange rate rather than Argentina's fixed currency. Nevertheless, Mr. Cornelsen acknowledged that "some kind of South American monetary union is ultimately inevitable." Even without a common currency, Mercosur already stands as the most ambitious experiment in economic and social integration in South American history. It is all the more notable because historically, there has been no love lost between the haughty Argentines and the freewheeling Brazilians. Argentina and Brazil fought a war against each other, and as recently as the 1980s Brazilians were still building their railroads with wider tracks than Argentina's, to make it that much harder on potential invaders. But faced with intractable problems of stagnation and inflation at the start of this decade, the two neighbors laid aside age-old grudges to develop an economic union that also encompassed Uruguay and Paraguay. "Germany and France constituted the pivot of the construction of the European Union, and Brazil and Argentina are doing the same for Mercosur," Brazilian President Fernando Henrique Cardoso said not long ago. Since the start of the decade, trade within the Latin colossus has grown fivefold. Auto makers alone are investing $20 billion in heavily integrated plants throughout the region. But the interchange transcends economics. Argentine naval pilots n

___ Document 142 of 400 Argentina in 30-year dollar bond issue Author: Luce, Edward Publication info: Financial Times [London (UK)] 03 Sep 1997: 29. http://search.proquest.com/docview/248411524?accountid=28034 Abstract: Argentina yesterday revealed plans to launch its first 30-year global US dollar bond issue in exchange for the retirement of at least $1bn (£600m) of its old-style restructured debt. The transaction, which Argentina hopes will enable it to cast off its 1980s image as a country with serious debt problems, comes at a time of wavering confidence in emerging markets as a result of the financial turmoil in Asia. However, Argentina, which has chalked up steady improvements in its economic performance over the last three years, is expected to get a positive reception on the international bond markets. Full text: Argentina yesterday revealed plans to launch its first 30-year global US

inancial turmoil. And the austerity package announced last week in Brazil, Argentina's main trading partner, has further damped expectations. The changed international financial conditions leave Argentina with a likely mix of lower export demand from Brazil, higher domestic interest rates and a higher country-risk premium. Despite these negatives, many analysts are making only modest cuts in their growth forecasts. Walter Molano of SBC Warburg in New York, who was earlier predicting a "floor" of 6 per cent growth next year, has adjusted his forecast down to 4{1/2}-5 per cent. Analysts' relative optimism is based on several factors. Higher domestic rates, while delaying some companies' projects, may have only a limited effect on Argentine consumers. "Growth in Argentina this time has been investment-led," said Mr Molano. "Consumer spending never really reignited, so there is not so far to fall." Lower exports to Brazil, though unwelcome, will affect chiefly consumer goods, in particular vehicles and vehicle parts. Commodities and oil will find other outlets. Mining is also set to make a growing contribution to exports next year. Argentine exports make up less than 10 per cent of GDP, and exports to Brazil account for just 3 per cent, limiting the impact of a Brazilian downturn. A slowdown should help Argentina's trade position as imports of capital goods decline. This would help contain the current account deficit, heading for about 3 per cen

___ Document 191 of 500 Economic Moderate Wins Key Argentine Primary --- Buenos Aires Mayor Faces Ruling Party Author: By Craig Torres Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 01 Dec 1998: A16. http://search.proquest.com/docview/398662698?accountid=28034 Abstract: Argentina kicked off its presidential election year with a vote for economic continuity as Buenos Aires Mayor Fernando de la Rua emerged as the candidate who will challenge President Carlos Menem's Peronist Party in 1999. Mr. de la Rua, a 61-year-old lawyer and member of Argentina's centrist Radical Party, handily defeated his leftist opponent, Graciela Fernandez Meijide, in the weekend primary staged by a coalition of opposition parties known as the Alliance. Analysts said the results show that Argentines don't want drastic changes with the free-market model endorsed by Mr. Menem; they just want it administered with greater transparency and honesty. Mr. de la Rua's Radical Party took a bad economy and made it worse in the 1980s by sustaining a bloated state with monetary expansion; that led to an inflation spiral that nearly destroyed Argentine industry. But the party has presented itself as highly ethical, and that has attracted voters exhausted by the murky scandals surrounding the Menem administration. The Alliance now leads the Peronist Party in the polls. Full text: BUENOS AIRES -- Argentina kicked off its presidential election year with a vote for economic continuity as Buenos Aires Mayor Fernando de la Rua emerged as the candidate who will challenge President Carlos Menem's Peronist Party in 1999. Mr. de la Rua, a 61-year-old lawyer and member o

ted with such equanimity by the foreign investors on which Argentina depends for financing. That's why Wall Street economists are keeping their fingers crossed that Mr. Menem's pledges are aimed at generating a quick boost for his Peronist Party ahead of next month's congressional elections rather than signaling a shift in Argentina's generally cautious fiscal stance. "I'm going to wait and see what they actually do, not what they say," said Francis Freisinger, senior Latin American economist at Merrill Lynch & Co. in New York. What's clear, according to Mr. Freisinger and other economists, is that Argentina doesn't have room to jack up spending even though its economy is expected to grow by 7% or more this year and 6% next year. Indeed, on Wednesday, the International Monetary Fund substantially raised its projection of growth in Argentina's 1997 gross domestic product to 7.5%, from its May estimate of 5%, though its revised estimate was put together before Mr. Menem's latest economic pronouncements. Mr. Menem's spending promises were made even though his 1998 budget calls for a cut in the government-financing deficit from an estimated 1.5% of GDP in 1997 to under 1% next year. The deficit estimates are in line with a three-year loan agreement being negotiated between Argentina and the IMF. But you wouldn't know any of this from listening to Mr. Menem. Stumping for his party in advance of the October midterm poll, he lately has promised to boost the salaries of the country's 655,000 public-school teachers by 20% and to increase the minimum monthly payout by $50 to some

___ Document 438 of 500 Argentina's Menem Changes His Mind And Decides Not to Seek Third Term Author: By Craig Torres Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 22 July 1998: A11. http://search.proquest.com/docview/398787980?accountid=28034 Abstract: "This president will leave office unfailingly on December 10, 1999, and aspires to place the sash on another Peronist president who will continue the revolution we started," Mr. (Carlos Saul) Menem said in an unexpected news conference yesterday. Crediting himself with Argentina's "peaceful and democratic revolution," the 68-year-old president said "the fruits of this effort is wealth for all, and nothing and no one has the right to put that in danger." Argentina has managed to grow at a remarkable 6.2% a year on average during Mr. Menem's two terms, and inflation has fallen to below 2% from 4,924% in 1989. Mr. Menem's re-election bid had become a contentious issue within his own Peronist party as well as Argentina, and was starting to have an impact on crucial legislation, such as a tax bill now working its way through Congress. The 1994 constitution limits presidents to two consecutive terms. Mr. Menem was elected to a single six-year term in 1989, and was elected to a second, four-year term after a constitutional amendment allowed him to run. Full text: BUENOS AIRES -- Argentine President Carlos Saul Menem said he won't seek a third consecutive term because political disunity over the issue was putting the country's decade of progress at risk. "This president will leave office unfailingly on December 10, 1999, and aspires to place the sash on

3.5 million long-suffering pensioners. On Tuesday night, Mr. Menem announced a plan to give small and medium-size businesses as long as five years to pay their back taxes at a 3% annual interest rate. The Peronists are heading to the polls neck-and-neck with a new electoral alliance formed by their traditional opponents, the Radical Party, and Frepaso, a center-left group that puts strong emphasis on good government. Pollsters say there is a good chance the Peronists will lose their majority in Congress, weakening Mr. Menem in the final two years of his now-seven-year stay in power. Morgan Stanley, Dean Witter, Discover & Co. economist Carlos Janada says he is worried that the pressure to spend will mount and the government will have a tough time balancing fiscal soundness with demands for a better social cushion for teachers, pensioners and others who have been left out of Mr. Menem's free-market revolution. "This will be the key issue in 1998," he says. Wall Street economists argue that Argentina can't afford to be sanguine about government spending because of a deteriorating current-account deficit. Export performance is weakening, they note, due to lower commodity prices, poor weather in some parts of the country and a strong Argentine peso. What's more, the tax take isn't as good as overall economic growth would suggest, forcing the government to borrow more to meet its targets. J.P. Morgan & Co. economist Alfonso Prat-Guy said the government is relying on "some creative accounting" to meet its 1997 fiscal goals. Credit: Staff Reporter of The Wall Street Journal

nd central-bank heads meeting today in Montevideo, Uruguay, will analyze possible policy responses should Brazil abandon its managed-currency regime. The meeting, which had been scheduled for Oct. 31, brings together members of Mercosur, the three-year-old customs union set up by Argentina, Brazil, Paraguay and Uruguay. "There will be discussion of compensatory mechanisms in the event of a substantial misalignment," says Mr. Rodriguez in an interview. For instance, Argentina might ask Brazil to promise not to take advantage of a cheaper currency to flood its neighbor with new exports. The meeting comes amid concern that Brazil's measures to vanquish speculation against the real won't do the trick. Last week, Brazil doubled some short-term interest rates and on Monday followed up with a bruising austerity plan designed to cut the country's budget and trade deficits. Despite the measures, which are expected to all but choke off economic growth in Brazil next year, financial markets aren't convinced Mr. Cardoso's government can hold the line. The prices of Brazilian government bonds haven't recovered much ground since the measures were taken. Although Brazilian stocks closed up 3.2% yesterday, the bellwether Bovespa stock market index has lost nearly 36% in the past month. The response of the financial market indicates that investors "are still building a devaluation into their prognosis," says Argentine economist Orlando Ferreres. Adds Carlos Fedrigotti, the head of Citibank Argentina, "the Brazilians have yet to generate a change in expectations." Argentina counts Brazil as its largest trading partner, but mainly sells basic commodities and thus doesn't view a recession there as deeply harmful to its interests. A devaluation of the real, however, would scare off foreign financial investors from both countries for mon

and leaseback, or other imaginable halfway houses), their answer is a flat no: for all Mr Di Tella's "charm offensive", their distrust is deep. Britain equally refuses to negotiate, against the urging of the UN's decolonisation committee. The Malvinas are not the Argentine public's first concern these days. Yet the scars of 1982 keep this an emotive issue. Mr Menem has sworn to raise it whenever he can in his visit, not least with Mr Blair. But that exchange has been tightly choreographed: Mr Blair will listen politely, note the Argentine position and move on to other business. "At the level of political discussion and negotiation there is absolutely no activity," laments Mr Di Tella. Nor has Britain much economic incentive to talk. Its garrison of some 2,000 men may cost $125m a year, but otherwise the islands pay for themselves, thanks largely to the sale of fishing licences. They may be surrounded by oil too, though that dream has been dashed by the results of the first exploratory drilling, this year: one company calls a well it sank "our driest ever". If change is to come, Mr Di Tella knows, it must start with the 2,200 islanders. His charm offensive-last Christmas, presents of books and videos on Argentina's natural beauty-has been frostily received. Yet he remains enthusiastic. "It is not an attempt to make them change their minds, but to create an environment where it might be possible to negotiate one day." That day, if ever it comes, is unlikely to be his. With elections due next year, Argentina's opposition Alliance is far ahead in the polls. Its senior figures refused to join Mr Menem on his trip, saying it was a bit of his propaganda. So-among other thingsit is: his dream of winning a third term in has been blasted, but he still hopes for a place in history as a statesman. But the Alliance's attitude springs also from a tougher line on the Falklands. Of course, that might well be watered down by an Alliance government (and the constitution, in its latest form, though it enshrines Argentina's claim, also implicitly disavows the use of force to achieve it). But, however smoothly Mr Menem's visit may go, Britain cannot suppose that the Falklands irritant to good relations can then be pigeonholed.

___ Document 260 of 500 Yesterday's Diplomats Are Today's Entrepreneurs in Argentina Author: By Jonathan Friedland Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 08 Jan 1998: A5. http://search.proquest.com/docview/398680336?accountid=28034 Abstract: James Cheek, who left Buenos Aires in December 1996, and his predecessor, Terence Todman, both represent groups bidding today on a 30-year concession to run 33 of Argentina's airports. In the run-up to the bid, they have been busy lobbying U.S. and Argentine officials, including President Carlos Menem. Last year, Mr. Cheek also lobbied here on behalf of AMR Corp., parent of American Airlines, before its purchase of a stake in former state-owned carrier Aerolineas Argentinas. Last month, it was Mr. Todman who explained to Argentine politicians and media owners a $605 million deal by a U.S. investor-backed local buyout firm called Exxel Group. Mr. Todman is a director of Exxel, which bought two companies that, in the past, have been linked to Alfredo Yabran, a local businessman accused by former economy minister Domingo Cavallo of being an organized-crime boss. Mr. Yabran, who denies any wrongdoing and hasn't been convicted of any crimes, is suing Mr. Cavallo, alleging libel. Separately, Mr. Cheek has taken on advisory work for another company that previously was linked to Mr. Yabran. The company, printer Ciccone Calcografica SA, is part of a group bidding on the $600 million-plus contract to computerize registries of all Argentine residents and visitors and to print and distribute identity cards. Mr. Cheek, who during his stint here pushed for beefed-up border controls to combat transnational crimes such as drug trafficking and terrorism and was a frequent critic of Mr. Yabran, says he helped Ciccone last year on matters unrelated to the registries job. Full text: BUENOS AIRES -- It seems that whenever there's a big and controversial business deal in Argentina nowadays, a former U.S. ambassador is in the thick of it. James Cheek, who left Buenos Aires in December 1996, and his predecessor, Terence Todman, both represent groups bidding today on a 30-year concession to run 33 of Argentina's airports. In the run-up to the bid, the

ing consumption. Wall Street economists figured the impact of Asia's economic crisis on world demand would slow Argentina's economy down to 4% annual growth from an estimated 8.4% in 1997. "The numbers are coming in, and in fact we are seeing the Asian crisis has had very little effect" on Argentina's growth, Finance Undersecretary Miguel Kiguel said. But Argentina has already set off one alarm at the IMF by overshooting a rolling 12-month target on the trade deficit by $385 million in January, says Pedro Lacoste, an independent economist here. At current rates of economic growth, Mr. Lacoste estimates the country will also overshoot the consensus forecast on the current-account deficit of around 4% of gross domestic product and push it to 5% of GDP, which is a widely perceived limit of investor tolerance. (The current account is the widest definition of a country's imports and exports of goods and services.) With a presidential election year looming in 1999 and unemployment still uncomfortably high at 13.8%, finance-ministry officials bristle at suggestions that growth should slow to correct trade accounts. "Our view is that the current-account deficit doesn't represent a threat to Argentina," Mr. Kiguel told investors and analysts at a conference sponsored by Deutsche Morgan Grenfell this week. "It represents the success of Argentina." Mr. Kiguel said the government "might agree" to postpone about $400 million in federal expenditures and to a boost in bank-reserve requirements to slow loan growth. "But if they [the IMF] want further measures, it will be much more difficult to get," he said. Such a pugnacious attitude toward the IMF is surprising in light of the fact that just about every major Latin nation has tightened policies in some way to adjust to the impact from the Asian economic crisis, which has caused a deep decline in prices of key commodities that many of these countries export. Mr. Lacoste notes that Argentina's export

___ Document 337 of 500 Argentina Confident Despite Ills In Brazil Author: By Craig Torres Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 14 Sep 1998: A24. http://search.proquest.com/docview/398673242?accountid=28034 Abstract: This year's rout in the local stock market aside, an eerie calm prevails in Argentina as its giant neighbor, Brazil, wrestles with a worsening threat of devaluation. Developed by former Economy Minister Domingo Cavallo in 1991, the convertibility plan essentially acknowledged the obvious. A vicious cycle of devaluation and hyperinflation had completely discredited Argentina's money. So Mr. Cavallo simply said Argentina has no other currency but dollars. In effect, pesos are merely dollar substitutes used for commercial and nationalistic purposes; Argentines can use dollars to pay for taxi rides, meals, candy bars or just about anything because pesos and dollars are completely interchangeable at a one-to-one rate. The central bank must back every peso in circulation today with a dollar of reserves. Data as recent as Sept. 2 show that Argentina's overall level of bank deposits is stable, a sign that capital flight hasn't plagued Argentina. Skittishness over the Argentine peso is also negligible with total dollar deposits rising in the most recent period by less than $1 billion, though further increases may be seen in coming days. "The financial system has behaved better" with each test, Pablo Guidotti, Argentina's vice minister of economy, said Friday in an interview with Wall Street Journal editors. "We do not expect, even under tough circumstances...a problem of liquidity in the banking system." Full text: BUENOS AIRES -- This year's rout in the local stock market aside, an eerie calm prevails in Argentina as its giant neighbor, Brazil, wrestles with a worsening threat of devaluation. For now, Argentines are confident that their seven-year-old monetary system, known as the convertibility plan, can withstand the shock of Brazil's currency turmoil. "I don't see any risk that convertibility is modified," says Carlos Leone, chief executive officer of Acindar SA, a large specialty steel company here. Developed by former Economy Minister Do

___ Document 406 of 500 Argentine Opposition Wants State To Recover Bigger Economic Role Author: By Craig Torres Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 12 Aug 1998: A12. http://search.proquest.com/docview/398827093?accountid=28034 Abstract: Argentina's opposition-party coalition unveiled its economic platform for the 1999 presidential elections, promising to keep the peso pegged to the dollar while seeking a larger state role in economic affairs. The document, released late Monday, is likely to become a leading example of how center-left parties in Latin America plan to recover a role for state institutions after they were discredited in the 1980s and all but dismantled in the 1990s through privatization and deregulation. The proposals, called "A Letter to the Argentines," gives the coalition, known as the Alliance, important influence over the economic debate as the ruling Peronist party remains distracted by infighting. Argentina is expected to hold presidential elections in October 1999. In a national poll conducted in May by the Buenos Aires firm Mora y Araujo & Associados, the Alliance's most likely candidates for the presidency led the Peronist candidates by as much as eight percentage points. Full text: BUENOS AIRES -- Argentina's opposition-party coalition unveiled its economic platform for the 1999 presidential elections, promising to keep the peso pegged to the dollar while seeking a larger state ro

___ Document 163 of 500 The Americas: How to Make a Currency Board Work in Indonesia Author: By Domingo F. Cavallo Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 06 Mar 1998: A15. http://search.proquest.com/docview/398821039?accountid=28034 Abstract: Today in Argentina there is a wide consensus among political and economic leaders, as well as academic and professional economists, about the importance of the role that the 1991 Convertibility Law played in stabilizing the economy. The macroeconomic data are more than eloquent: Between 1990 and 1997 inflation fell continuously to an annual rate of 1% from over 1,000%. During the same period, gross domestic product grew more than 50%, or at an average annual rate of more than 6%. -- The Argentine peso is convertible to dollars at a fixed parity, but the central bank is not obliged to buy all the dollars that are offered in the market. Therefore, Argentine monetary policy is determined by the U.S. Federal Reserve, but only because the peso is weaker than the dollar. Argentina could have an active monetary policy if the situation were reversed, for instance with the Fed adopting an inflationary monetary policy while Argentina pursued a more conservative price stability target. -- Through successive crises, Argentine monetary authorities have proven that they are willing to permit the complete dollarization of the economy rather than abandon the commitment to convertibility or promote extremely high interest rates. In this sense, the management of the Argentine monetary system is unlike that of Hong Kong's currency board. During the Asian crisis Hong Kong's monetary authorities have used monetary activism to force a significant rise in interest rates, demonstrating that they do not want to allow a shift from Hong Kong dollars to U.S. dollars in the portfolio of currency holders. As a consequence, Hong Kong's U.S. dollar reserves have increased more than $15 billion since July; equity and real estate prices have fallen more than would have occurred without such a policy. In Argentina, on the other hand, the Convertibility Law minimized the increase in interest rates, even when the country's demand for dollars increased. Full text: BUENOS AIRES -- Today in Argentina there is a wide consensus among political and economic leaders, as well as academic and professional economists, about the importance of the role that the 1991 Convertibility Law played in stabilizing the economy. The macroeconomic data are more than eloquent: Between 1990 and 1997 inflation fell continuously to an annual rate of 1% from over 1,000%. During the same period, gross domestic product grew more than 50%, or at an average annual rate of more than 6%. Since the public debate over Indonesia's possible adoption of a currency board began, I have been frequently asked if such a system would be as successful in Indonesia as monetary convertibility has been in Argentina. This question is apropos, since the crisis in Indonesia has

allen $600m from budgeted levels since the Russian debt crisis in August, while the credit crunch has slowed economic growth sharply. The fiscal deficit target for next year looks set to be eased from $2.65bn to $3bn. "The effect of the crisis on economic activity in the second half has been much greater than we anticipated," said a senior economy ministry official. Gross domestic product growth fell to a preliminary 2.9 per cent in the third quarter, against a revised 7.4 per cent in the second period. Copyright Financial Times Limited 1998. All Rights Reserved.

, Argentina knows very little about democracy. From 1930 to 1983 Argentina had more military dictatorships than civilian elected governments. All of the elected governments, except for two, were brought down by military coups. So, in fact, Argentina's experiment with democracy is only just beginning. Currently the congressional electoral process forces voters to choose a list of candidates for a given party -- drawn up and ranked by party officials -- rather than allowing them to vote for their candidate of choice. This concentrates power in the hands of party bosses. The unwillingness to reform inflexible labor laws in Congress reflects this distortion. Mr. Rodriguez says that in order to address the unemployment problem "we need the legal mechanisms to create more jobs." But the removal of labor law barriers to job creation is easily blocked by the Peronist party, which owes its allegiance to the union leaders. Likewise, the feeling is widespread that the country lacks an independent judiciary. Mr. Menem has named six of the nine current Supreme Court justices, effectively "packing the court." He also is assumed to have strong influence with the lower levels of the judiciary, according to Horacio Verbitsky, author of the book "Hacer La Corte" and a critic of the Argentine judicial system. This influence damages judicial credibility, even without any glaring proof of judicial bias. The Argentine public widely suspects that the government is able to protect its own functionaries from corruption charges and to attack its enemies through the court system. For now Argentine civil society only reacts against the distortions created by the imperfections of institutions. The president takes credit for the economic success story but credit should really go to the business community, which in the absence of secure institutions has learned to improvise -- using the black market for labor and private arbitration in place of the judiciary -- in order to survive and succeed. As a country in transition -- political as well as economic -- Argentina is learning that greater openness reveals the weaknesses of its institutions. Much of the needed change will come about as the private sector is strengthened and civil society sharpens its focus on these problems. In the long run institutionalizing democracy is the only way the country will build a world-class economy. --- Ms. O'Grady edits the Americas column.

t year. Even the slightest turn in wheat, soy or mineral prices would prove a boon to Argentina, where agriculture and mining products make up 56% of all exports. Nevertheless, Argentina has suffered from Brazil's turmoil. The risk of effects from a Brazilian devaluation pushed Argentina's prime lending rates to a peak of 19% on Sept. 24, from 8% in early August; the rates stand at around 12% today. Business sentiment has hit a three-year low and manufacturing is slowing, especially in the auto sector. Some 90% of all Argentine auto exports are absorbed by Brazil, and local plants in Argentina have experienced temporary shutdowns. "It is the most sensitive sector to Brazilian consumer spending and interest rates," says Gloria Sorensen, an economist at Banco Frances SA. She says sales to Brazil could remain flat in 1999, or fall by 10%. Economic forecasts vary widely now because no one is convinced that a Brazilian fiscal-austerity program will diminish speculation against the local currency. Right now, "there is a clear perception [in the world] that we shouldn't let Brazil go under," says Martin Redrado, president of Fundacion Capital, an Argentine economics firm that forecasts economic growth of 3.5% next year. "We have lowered contagion risk, momentarily." Credit: Staff Reporter of The Wall Street Journal

ow train on Brazilian aircraft carriers; Brazilian translators are preparing special Portuguese-language versions of the works of Argentine novelist Jose Luis Borges. When India and Pakistan recently went mano a mano in a nuclear arms race, President Clinton lectured the Asians to learn from Argentina and Brazil about cross-border cooperation on peaceful nuclear-power projects. The aftermath of Mexico's 1994 peso crisis proved the biggest threat yet to comity in Mercosur. With speculators attacking its economy, Brazil enraged Argentina by unilaterally imposing restrictions on auto imports to defend its own commercial interests. The dispute grew so bitter that one Argentine newspaper provoked a formal diplomatic protest from Brazil's government by publishing a racist editorial cartoon about Brazilians. Notably, there have been no such flare-ups during the current Brazilian crisis. That may reflect the fact that cross-border ties have gotten so close, and touched so many different areas of society, that there seems to be no turning back for either country. Argentina has made massive investments in Brazil and counts on its neighbor as the market for one-third of its exports. YPF SA, Argentina's largest oil company, has several joint ventures with Petroleo Brasileiro SA, the state-controlled Brazilian oil company, that range from mutual exploration of oil fields to a quirky program where YPF will open gas stations in Brazil and Petrobras will open stations in Argentina. The idea is to expand both brands in what both companies believe will some day be a common market. Personal links have followed commercial ones. A novel by Brazilian New Age writer Paulo Coelho is now ranked No. 2 on Argentina's bestseller list. At Brooklyn Bridge SA, a Buenos Aires language school used by many Argentine businesses, enrollments in Portuguese classes are up 60% over the past four years. Of course, what's driving the ties is business and that depends on stability. "I receive calls nearly every day from Argentine businessmen asking me if Brazil has devalued yet," said Alberto Alzueta, vice president of the Argentine Chamber of Commerce office in Sao Paulo. "If they do, it's a catastrophe. It ends business with Argentina." Hence the Argentine obsession with a common currency. Many Argentines see such a plan as a form of protecting their own interests in Brazil. Said Domingo Cavallo, the former economy minister who was architect of Argentina's stabilization: "One of the causes of the crisis we are living in is that there are too many monetary policies in the world pretending to be independent," he said. "Regional monies or convertibility regimens are advances in the right direction for a better international monetary system." Jose Alexandre Sheinkman, a Brazilian who is an economist at the University of Chicago, said he sees many virtues in Argentina's currency model. But he added that discussions of monetary reform are largely a distraction until Brazil puts its fiscal house in order. "The major problem Brazil has is the deficit, and once we solve this problem, there are many ways we can organize our monetary system," he said. "Until then, I don't think anything is going to work." Credit: Staff Reporters of The Wall Street Journal

s can use dollars or local pesos, deposits remain stable, indicating there is almost no capital flight. But there is a slow, orderly increase in dollar deposits compared with pesos, which is increasing peso lending rates. In Brazil, outflows of foreign capital have raised domestic interest rates sharply. Average lending rates for a two-year auto loan in Argentina are around 18% today; in Brazil, one large auto financing company has raised rates to 3.3% a month, or around 48% annually. Auto production and related industries make up about a quarter of Argentina's industrial output. Pedro LaCoste, an independent economist here, says the auto industry's slowdown is an early indicator of the slowdown in Argentina's economy. Nevertheless, Argentina's economy ministry is estimating gross domestic product growth of more than 4% next year. "We are convinced that the hypotheses we used are reasonable," Economy Minister Roque Fernandez said this week. Mr. Fernandez also said he didn't think unemployment will rise next year. --- Peter Fritsch in Sao Paulo, Brazil, contributed to this article. Credit: Staff Reporter of The Wall Street Journal

nk's World Development Report, published last week, said that in countries with good governance and sound policies, real income per head grew at 3 per cent a year in the two decades to 1993. With reasonable policies, but poor government, growth per head was only 1.4 per cent. In countries with neither, it was a mere 0.4 per cent. In a speech in May to Argentine bankers, Mr Michel Camdessus, IMF managing director, outlined three "key tasks" for the state: a transparent regulatory system, a professional and independent judicial system, and an improved quality of government spending. The minister of justice was more important than a minister of economy in the task of development, he declared. Mr Elias Jassan, Argentine justice minister, quit last week after admitting contacts with a controversial local businessman.

___ Document 332 of 600 DIPLOMATIC AND TRADE RELATIONS Old maverick steps into line Author: Warn, Ken Publication info: Financial Times [London (UK)] 27 July 1998: 03. http://search.proquest.com/docview/248732317?accountid=28034 Abstract: President Carlos Menem's planned visit to London at the end of October is a powerful illustration of the revolution in Argentine foreign policy that has taken place since 1989. Argentina has ditched its maverick stance and non-aligned rhetoric to forge strong ties with the US, neighbouring countries and the European Union. With 400 troops in Cyprus, 120 in Haiti and 900 in Bosnia, Argentina is the most active Latin American country in United Nations peacekeeping operations. It was the only Latin American nation to participate in the 1991 Gulf War, and this February stood ready to participate in a fresh US-led strike against Iraq. Last year, Argentina won its reward when Washington approved its claim to be designated as special non-Nato ally. The move has already boosted co-operation in areas such as training and could give Argentina access to surplus Nato hardware. It may also help win US congressional approval for purchases of US weaponry by Argentina's cash-strapped armed forces. Full text: * by Ken Warn Old maverick steps into line Locals say ties with the US and Europe are becoming closer than ever President Carlos Menem's planned visit to London at the end of October is a powerful illustration of the revolution in Argentine foreign policy that has taken place since 1989. Argentina has ditched its maverick stance and non-aligned rhetoric to forge strong ties with the US, neighbouring countries and the European Union. It has even put its territorial dispute with Britain to one side under a special negotiating "umbrella" in the pursuit of normal trade and diplomatic relations. The two countries fought a bloody war in 1982 over the disputed Falkland Islands in the South Atlantic. Ties with Washington, once marked by mutual suspicion, have since become "carnal relations", in the phrase of foreign minister Guido Di Tella. "The change in foreign policy came before, and is at least as profound as the economic reforms of the Menem government," says Carlos Helbling, an economic and foreign affair

t by announcing the measures without consulting its partners, Brasilia violated the spirit, if not the letter, of the agreement. That said, they didn't immediately come up with a workable proposal to exempt them from the new measures without undermining World Trade Organization rules. The trade tiff has been a further blow to the region's stock markets, which already were feeling the spillover effects from the recent sell-off on Wall Street. The measures reflected Brazilian economic authorities' concern over the country's mounting trade deficit, a by-product of Brazil's use of its strong currency to control inflation. Through the first three weeks of March, Brazil's trade deficit for 1997 had reached $2.85 billion -- more than half of the total deficit of $5.53 billion for all of 1996. Trade restrictions are a more politically palatable way for Brazilian officials to rein in the deficit than slowing the economy or devaluing the currency. "This may turn out the first of a series of measures to address trade concerns," J.P. Morgan & Co. said in a report. It wasn't immediately possible to quantify the impact that the credit restrictions, as originally proposed, would have on Brazil's imports, which totaled $53.2 billion last year. Sendas, a big Brazilian supermarket chain, said in the wake of the proposed changes that it would reduce by 40% the $100 million in goods it planned to import this year. Brazilian banks and brokerage firms estimated that the proposed restrictions would have less dramatic impacts, reducing Brazilian imports by only between $2 billion and $4 billion. Brazil is Argentina's second-largest trading partner after the U.S.; it sells 30% of its exports to its northern neighbor. In 1996, that produced a trade surplus for Argentina, whic