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<s>[INST] ___ Document 8 of 500 Latin Debt Rated High By Agencies [/INST] Author: By Thomas T. Vogel Jr. Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 17 June 1998: A10. </s>

<s>[INST] accountid=28034 Abstract: While the fallout of the Asian crisis has made borrowing abroad harder and widened trade [/INST] deficits, conservative monetary, fiscal and exchange-rate policies have saved major economies like Mexico, Argentina, Peru and Chile from rating downgrades, a big change from four years ago after the Mexican currency crisis. </s>

<s>[INST] Peru even got an [/INST] upgrade from Moody's Investor's Service last month. </s>

<s>[INST] Moody's is reviewing its long-term foreign currency ratings for Venezuela and Ecuador for [/INST] possible downgrades and recently put Colombia and Brazil on negative outlook, which could lead to a review and possible ratings cuts down the line. </s>

<s>[INST] If the Asian currency crisis deepens significantly, Latin debt [/INST] ratings could take it on the chin as borrowing abroad becomes prohibitively expensive and exports drop further. </s>

<s>[INST] But for the moment, most of Latin America's finance [/INST] ministers have done a good job in staving off problems before they become major crises. </s>

<s>[INST] So while Asian debt ratings have [/INST] plunged, most Latin debt ratings have held their ground. </s>

<s>[INST] Full text: CARACAS, Venezuela -- Life is tough for Latin [/INST] America's economies these days but not as bad as you might think, according to the ratings agencies. </s>

<s>[INST] While the fallout of the Asian crisis has made borrowing abroad harder and widened trade deficits, [/INST] conservative monetary, fiscal and exchange-rate policies have saved major economies like Mexico, Argentina, Peru and Chile from rating downgrades, a big change from four years ago after the Mexican currency crisis. </s>

<s>[INST] Peru even got an [/INST] upgrade from Moody's Investor's Service last month. </s>

<s>[INST] Moody's is reviewing its long-term foreign currency ratings for Venezuela and Ecuador for [/INST] possible downgrades and recently put Colombia and Brazil on negative outlook, which could lead to a review and possible ratings cuts down the line. </s>

<s>[INST] If the Asian currency crisis deepens significantly, Latin debt [/INST] ratings could take it on the chin as borrowing abroad becomes prohibitively expensive and exports drop further. </s>

<s>[INST] But for the moment, most of Latin America's finance [/INST] ministers have done a good job in staving off problems before they become major crises. </s>

<s>[INST] So while Asian debt ratings have [/INST] plunged, most Latin debt ratings have held their ground. </s>

<s>[INST] "Latin American countries have undertaken pretty significant structural reforms in [/INST] the last couple of years," says Joydeep Mukherj, a sovereign ratings analyst with Standard & Poor's in New York. </s>

<s>[INST] "They are less vulnerable to the Asian [/INST] crisis than they would have been a few years ago," he adds. </s>

<s>[INST] "The banking systems of Latin America, for example, are [/INST] stronger than four years ago," he points out, "though there is room for more strengthening". </s>

<s>[INST] In many ways the current pressures on Latin America are much greater [/INST] than during the Mexican peso crisis and more difficult to control, because they have nothing to do with faulty economic policies. </s>

<s>[INST] Besides a sharp drop in exports to Asia, greater difficulty in borrowing abroad, [/INST] and speculative pressures on their currencies, thanks to a world-wide investor flight from developing nations, Latin economies have been hit by other factors. </s>

<s>[INST] These include a sharp drop in commodities [/INST] prices, and massive property and agricultural damage from the El Nino meteorological phenomenon. </s>

<s>[INST] Mexico, Chile and Argentina all get high grades [/INST] for quick-thinking crisis management from Mauro Leos, a senior sovereign debt analyst at Moody's. </s>

<s>[INST] Brazil is moving in the right direction [/INST] but remains a concern, due to rising internal debt levels, he adds. </s>

<s>[INST] Low oil prices are battering all of Latin America's [/INST] major oil exporters, especially Ecuador, Colombia, and Venezuela, whose ratings may suffer as a result. </s>

<s>[INST] Yet another big oil exporter, Mexico, moved quickly [/INST] to reduce government spending to make up for lost revenues, says Mr. Leos. </s>

<s>[INST] In the past "Mexico's [/INST] policy was not as effective," he says. </s>

<s>[INST] A third of Chile's exports [/INST] go to Asia, so the crisis has hit hard. </s>

<s>[INST] Yet Chile sharply increased interest [/INST] rates and kept its budget balanced, says Mr. Leos. </s>

<s>[INST] Argentina survived the Mexican peso crisis and Mr. Leos expects it [/INST] to stand its ground again this time around, though it "still has adjustments to make" like reducing a burgeoning current-account deficit. </s>

<s>[INST] El Nino devastated Peru's important fishmeal exports [/INST] and low commodities prices are hurting government revenues, says Mr. Leos. </s>

<s>[INST] But Peru has "maintained conservative [/INST] fiscal and monetary policies," he points out. </s>

<s>[INST] A big jump in the country's current-account deficit is worrisome, [/INST] he says, but Peru has breathing room: It restructured its external debt load over the past few years. </s>

<s>[INST] --- Standing Firm Long-term foreign-currency debt ratings, and, in parentheses, outlooks, from Moody's Investors Service and Standard & Poor's Moody's S&P Argentina Ba3 (stable) BB (stable) Brazil B1 (negative) BB- (stable) Chile [/INST] Baa1* (stable) A- (stable) Colombia Baa3* (negative) BBB-* (stable) Ecuador B1 (negative) N.A. Mexico Ba2 (stable) BB (positive) Panama Baa1* (stable) BB+ (stable) Peru Ba3 (stable) BB (stable) Venezuela Ba2 (negative) B+ (stable) *Investment grade or above\ Note: Baa3 or above is investment grade for Moody's; BBB-minus or above is investment grade for S&P Credit: Staff Reporter of The Wall Street Journal </s>

<s>[INST] ___ Document 54 of 500 The Americas: Argentina's Market Reforms Overlooked [/INST] Small Business Author: By Paul Holden Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 15 May 1998: A15. </s>

<s>[INST] accountid=28034 Abstract: An Argentine merchant sits alone [/INST] in his small appliance shop in a middle-class Buenos Aires suburb. </s>

<s>[INST] Before the market reforms of the 1990s, [/INST] there used to be a steady stream of customers through his door. </s>

<s>[INST] Protected from competition by cozy distribution arrangements, he made a living that was [/INST] good enough to send one of his sons to college in the U.S. Today he is an uncompetitive player in a fast-paced, changing economy. </s>

<s>[INST] The combination of trade reform and stringent macroeconomic policy wiped [/INST] out many small Argentine businesses, such as retailers, agricultural producers and manufacturers, that had flourished under protectionism. </s>

<s>[INST] While high growth rates are back for the [/INST] economy as a whole, there are few signs of recovery in the small-business sector. </s>

<s>[INST] This has cost the government substantial political support [/INST] and there is growing concern about a potential backlash against the market-oriented reforms. </s>

<s>[INST] Although the problems of the small-business sector have largely been attributed [/INST] to a failure of the government to assist struggling enterprises, there is currently no shortage of small-business programs in Argentina. </s>

<s>[INST] An audit by the newly created Secretariat for Small and Medium Sized Enterprises unearthed over [/INST] 50 financial guarantee programs that have small-business components and another review of small-business programs by the Ministry of the Economy identified several hundred aimed at assisting small businesses. </s>

<s>[INST] Both the Inter-American Development Bank and the World Bank have [/INST] loan programs amounting to hundreds of millions of dollars that are supposed to assist the SME sector. </s>

<s>[INST] Full text: An Argentine merchant sits alone [/INST] in his small appliance shop in a middle-class Buenos Aires suburb. </s>

<s>[INST] Before the market reforms of the 1990s, [/INST] there used to be a steady stream of customers through his door. </s>

<s>[INST] Protected from competition by cozy distribution arrangements, he made a living that was [/INST] good enough to send one of his sons to college in the U.S. Today he is an uncompetitive player in a fast-paced, changing economy. </s>

<s>[INST] The combination of trade reform and stringent macroeconomic policy wiped [/INST] out many small Argentine businesses, such as retailers, agricultural producers and manufacturers, that had flourished under protectionism. </s>

<s>[INST] While high growth rates are back for the [/INST] economy as a whole, there are few signs of recovery in the small-business sector. </s>

<s>[INST] This has cost the government substantial political support [/INST] and there is growing concern about a potential backlash against the market-oriented reforms. </s>

<s>[INST] While populists blame the reforms for the 14% unemployment rate and wealth disparities, the real [/INST] problem is the fact that the second generation reforms -- changes in Argentina's institutional and legal systems that relate to business -- are yet to be tackled. </s>

<s>[INST] These reforms are critical to [/INST] grass-roots economic growth, a prerequisite for employment expansion. </s>

<s>[INST] As large multinational companies become [/INST] more productive, their work forces become leaner. </s>

<s>[INST] Meaningful job growth will [/INST] primarily come from a robust small-business sector. </s>

<s>[INST] Although the problems of the small-business sector have largely been attributed [/INST] to a failure of the government to assist struggling enterprises, there is currently no shortage of small-business programs in Argentina. </s>

<s>[INST] An audit by the newly created Secretariat for Small and Medium Sized Enterprises unearthed over [/INST] 50 financial guarantee programs that have small-business components and another review of small-business programs by the Ministry of the Economy identified several hundred aimed at assisting small businesses. </s>

<s>[INST] Both the Inter-American Development Bank and the World Bank have [/INST] loan programs amounting to hundreds of millions of dollars that are supposed to assist the SME sector. </s>

<s>[INST] Apparently the government recognizes that [/INST] additional small-business assistance programs are not necessarily the answer. </s>

<s>[INST] Undersecretary of the Interior Dr. Rodolfo Vacchiano [/INST] is in charge of coordinating small-business programs with the 24 provinces. </s>

<s>[INST] He is working to ensure that decentralization does [/INST] not lead to a mushrooming of uncoordinated and fiscally irresponsible local small-business assistance initiatives. </s>

<s>[INST] Yet, the small business sector [/INST] faces additional problems beyond ineffectual or uncoordinated assistance programs. </s>

<s>[INST] Many small businesses in Argentina are [/INST] simply unequipped to compete in the increasingly globalized business environment. </s>

<s>[INST] Accustomed to being insulated by high tariff barriers and regulation that protected [/INST] the inefficient, they now find themselves exposed to powerful competition, not only from imports but also from larger, modernized Argentine companies. </s>

<s>[INST] The retail sector, for example, is going through a [/INST] process of consolidation, with new shopping centers and supermarkets forcing smaller retailers out of business. </s>

<s>[INST] This phenomenon is an inevitable part of Argentina's transition [/INST] from a high-cost, inefficient, inward-orientated economy to one that can compete effectively in international markets. </s>

<s>[INST] That this transition is being successfully made [/INST] is evidenced by the sharp increase in exports over the past few years. </s>

<s>[INST] Small businesses' problems are compounded by [/INST] the fact that the financial markets are effectively unavailable to them. </s>

<s>[INST] Carlos Srebrow, a prominent small-business consultant in Buenos Aires, observes [/INST] that he has been overwhelmed with requests for help in restructuring businesses since the advent of economic reform. </s>

<s>[INST] Once he has improved their operating efficiency, however, the [/INST] owners ask him to help them find financing to take advantage of the new opportunities. </s>

<s>[INST] "Taking a client to a bank [/INST] to obtain a loan is extremely difficult," he says. </s>

<s>[INST] Underlying this problem is not an absence of guarantee programs or directed-credit programs for [/INST] small businesses but rather an institutional inadequacy which makes it risky to lend to any but large companies or those with large real estate holdings. </s>

<s>[INST] Long term growth for successful businesses [/INST] is also limited by the absence of structured venture capital markets. </s>

<s>[INST] The legal framework for the [/INST] pledging of business assets to secure loans is insufficient. </s>

<s>[INST] As a result, accounts receivable, capital [/INST] equipment and inventory cannot be used as collateral for business loans. </s>

<s>[INST] Since owner equity of many small and medium- size businesses has been eroded as [/INST] they struggled to survive in the newly competitive business environment of Argentina, it is no wonder that there have been record numbers of small business failures. </s>

<s>[INST] There are some stirrings [/INST] of a revival in the small-business sector. </s>

<s>[INST] Foreign banks, with more sophisticated lending technology, have entered [/INST] Argentina and are more willing than the domestic banks to make loans to small businesses. </s>

<s>[INST] Some progressive government officials recognize the need for [/INST] institutional reform and are attempting to persuade a reluctant Congress to change the legal framework. </s>

<s>[INST] Laws to reform the secured transactions framework [/INST] have been drafted but they are languishing between the bureaucracy and the legislature. </s>

<s>[INST] The World Bank is implementing a judicial-reform project, [/INST] but it is not clear that there is political will for such changes. </s>

<s>[INST] Labor laws are still very restrictive [/INST] by international standards although they have been relaxed for small companies. </s>

<s>[INST] High payroll taxes and the cost [/INST] of firing workers place heavy burdens on small businesses. </s>

<s>[INST] When the barriers to establishing new businesses are minimized [/INST] and the constraints to small business growth are eliminated, this sector appears set to create countless jobs. </s>

<s>[INST] Rather, the government should eliminate [/INST] regulatory and legal constraints that hurt the small-business sector. </s>

<s>[INST] It is an effort that will take several [/INST] years but the reward should be a vibrant small business sector in Argentina. </s>

<s>[INST] --- Mr. Holden is the director of [/INST] the Enterprise Research Institute for Latin America, a Washington-based think tank. </s>

<s>[INST] ___ Document 64 of 500 The Americas A Trade Deficit Is Just [/INST] What Argentina Needs Author: By Carlos A. Rodriguez Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 08 May 1998: A15. </s>

<s>[INST] accountid=28034 Abstract: During 1997 Argentina [/INST] broke many of its own macroeconomic performance records. </s>

<s>[INST] With an annual inflation rate [/INST] of only 0.3%, gross domestic product grew by 8.4%. </s>

<s>[INST] The unemployment rate fell by almost [/INST] 3 percentage points and 810,000 new jobs were created. </s>

<s>[INST] This was accomplished in the context of a stand-by loan [/INST] program with the International Monetary Fund that limited the size of the public-sector deficit to 1.4% of GDP. </s>

<s>[INST] My forecast for 1998 is zero inflation, GDP [/INST] growth of at least 6% and a fiscal deficit of 1% of GDP. </s>

<s>[INST] Despite this combination of robust growth and fiscal [/INST] restraint, some analysts continue to climb a wall of worry about the Argentine economy. </s>

<s>[INST] This stems largely from traditional -- and wrongheaded [/INST] -- concerns about a current-account deficit, which in Argentina today is 4% of GDP. </s>

<s>[INST] In order to understand why this deficit does not threaten [/INST] stability -- and why it is central to growth -- one must understand how it has come about. </s>

<s>[INST] The continuing current-account deficit is the result [/INST] of the confidence of foreign investors in Argentina's new economic system. </s>

<s>[INST] IRSA, a property company that is partially bankrolled by George Soros, [/INST] is buying urban property (office space and malls), Luciano Benetton is buying ranchland and Hong Kong & Shanghai Banking Corp. </s>

<s>[INST] of the U.K. and Banco [/INST] Santander of Spain are buying our larger private banks. </s>

<s>[INST] If we want to balance our current account, the only alternative short [/INST] of turning the small fiscal deficit into a large surplus would be to discourage genuine foreign investors from coming to our country. </s>

<s>[INST] In fact, if the only goal is to reduce the [/INST] current-account deficit, a smaller fiscal deficit might backfire since it would reduce country risk, encouraging more private inflows. </s>

<s>[INST] Full text: During 1997 Argentina [/INST] broke many of its own macroeconomic performance records. </s>

<s>[INST] With an annual inflation rate [/INST] of only 0.3%, gross domestic product grew by 8.4%. </s>