Argentina's value added tax, which was raised three points from 18 percent to 21 percent in April 1995, should stay at current levels for the short term, Fernandez said. Low U.S. interest rates, meanwhile, have boosted Argentina's borrowing capacity in international markets. After receiving offers from nine groups of banks to handle the sale, the city chose Chase Manhattan Corp., because of its global presence and emerging market experience, officials said. The lower interest rates, coupled with solid economic growth, have propelled Argentina's stock market to its highest levels of the year. The Merval index, which includes the 29 most-traded stocks on the Buenos Aires stock exchange has risen almost 20 percent since September 1.
Many analysts expect it to rise another eight to nine percent before the end of the year.
Largely due to its pension scheme, Chile has the highest national savings rate in Latin America, with average savings between 1991 and 1993 representing 23.4 per cent of gross domestic product. Argentina's ratio in the same period was 18.5 per cent. But even as the Mexican crisis was hitting Argentina hard last year, the government already had in place a plan that should ensure future financial market shocks have a less profound impact on the Argentine economy. Argentines have traditionally avoided formal forms of savings, as economic volatility and high inflation threatened to wipe-out overnight savings accumulated over time, but the economic stability of recent years has profoundly changed the incentives to save. No longer do Argentines feel the only safe storing places for the savings are outside their country.