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sing importance the group is attributing to the Mercosur markets. "We feel there are significant opportunities for us, especially in Argentina," says Mr Celio Peres, a director of Klabin. Klabin, founded in 1934, operates in most areas of the paper and pulp industry, including printing paper, paper sacks and envelopes, tissues, packaging paper, newspapers and recycling. The group, which has 230,000ha of planted forest and sales in 1995 of $1.28bn, is expected to list American Depositary Receipts (ADRs) in 1997. The group actually began exporting to Argentina over six years ago and Mr Peres says it has taken Klabin some time to learn how the market works and to invest. There are several reasons. The strong market in Brazil in 1994 and 1995, when the group was operating at full capacity, acted as a disincentive for it to look closely at neighbouring countries during those years, he says. The most important factor, though, has been improvements in the Argentine economy over recent years. "There exists now a stable economic environment, with lots of potential for growth," Mr Peres claims. In particular, he believes the prospects for the local cement and flour industries, which are important clients for the products to be produced at Pilar, will expand strongly. As well as lower transport costs for domestic sales,

___ Document 388 of 600 Argentina shrugs off Asian turmoil FT INTERVIEW: ROQUE FERNANDEZ: Author: Mandel-Campbell, Andrea; Warn, Ken Publication info: Financial Times [London (UK)] 18 Dec 1997: 05. http://search.proquest.com/docview/248453772?accountid=28034 Abstract: Global markets may be in turmoil because of the Asian financial crisis, but the guardians of Argentina's economy still expect 5.8 per cent growth next year. "When we made the forecast, we considered it conservative," Roque Fernandez, economy minister, said in an interview. "Look at what happened this year. When we forecast 5 per cent growth all the private sector economists and the International Monetary Fund said it was impossible to reach that number. But growth is going to be around 8 per cent for 1997," he said. 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. Full text: Global markets may be in turmoil because of the Asian financial crisis, but the guardians of Argentina's economy still expect 5.8 per cent growth next year. "When we made the forecast, we considered it conservative," Roque Fernandez, economy minister, said in an interview. "Look at what happened this year. When we forecast 5 per cent growth all the private sector economists and the International Monetary Fund said it was impossible to reach th

mingo 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. The plan tamed inflation to nearly zero and helped turn Argentina into a magnet of foreign direct investment. The result has been booming economic growth averaging more than 6% annually over the past nine years. That record alone has created many believers. "Convertibility has withstood the test of time," says Lawrence Goodman, chief economist at Santander Investment, New York. 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." "Dollars are not leaving the country," confirmed one private banker here. "Clients still feel very strong about" the currency system. Perhaps the larger risk to Argentina today is a Brazilian recession. Through strategic planning and proximity, both local companies and foreign multinationals located here have made an enormous bet on Brazil, Latin America's largest economy. Brazil is also pivotal to regional growth within Mercosur, a trading block that also includes Argentina, Uruguay and Paraguay. "The disruption a devaluation [in Brazil] would have on the way day-to-day business is done is unmeasurable," says Paul Dougall, d

___ Document 241 of 500 Brazil, Argentina reach pact in dispute over Brasilia's efforts to limit imports Author: Moffett, Matt; Friedland, Jonathan Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 02 Apr 1997: A, 11:5. http://search.proquest.com/docview/398556612?accountid=28034 Abstract: Trade negotiators from Brazil and Argentina reached agreement in principle to resolve a dispute over Brazil's new short-term credit restrictions designed to curb imports. Details of the agreement would be completed on Apr 2, 1997. Full text: RIO DE JANEIRO -- Trade negotiators from Brazil and Argentina reached agreement in principle to resolve a dispute over Brazil's new short-term credit restrictions designed to curb imports. The tiff over the Brazilian trade measures, which were designed to arrest Brazil's swelling commercial deficit, had placed further pressure on the region's embattled stock markets in recent days. Following talks in Brasilia yesterday between Argentina's Deputy Foreign Affairs Minister Andres Cisneros and his Brazilian counterparts, Argentine Economy Minister Roque Fernandez said in Buenos Aires that details of the agreement would be completed today when he travels to the Brazilian capital. "It's a satisfactory agreement for all parties," said Mr. Cisneros. Brazil's announcement last week of the restrictions, which limit short-term trade finance, had produced a flurry of complaints by other member-nations of the Mercosur customs union. The most significant move would compel Brazilian importers purchasing goods on less than 180 days' credit to pay for their foreign exchange upon delivery of the merchandise. Officials in Argentina, Uruguay and Chile, which late last year became associate members of the bloc, said tha

le 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. The Alliance envisions an Argentine economy where at the end of four years exports double to $50 billion annually, unemployment is halved to 6% of the work force and investment spending rises to 30% of gross domestic product. Annual economic growth is expected to average 6%, about equal to the rate of average growth over the past nine years under President Carlos Saul Menem. The model doesn't propose aggressive state intervention, but suggests that efficient, honest institutions can promote economic growth by simplifying bureaucratic codes, or kick-starting marginalized sectors through various forms of partnering, such as financing small export cooperatives. Pedro Lacoste

les set for privatisation of Argentina's postal system and airports, which he claims have been drafted to entrench monopoly positions. Mr Cavallo claims one entrepreneur secretly controls a network of companies that dominates Argentina's private postal services and runs duty-free shops and other services at the country's airports. Such accusations have been emphatically denied. Mr Cavallo defended his period in government, during which he had been gradually compiling evidence of corruption. He said he decided to go public because he became convinced of widespread mafia activity, with links to the executive, legislature and judiciary. He wanted to lead a "pre-emptive strike". "In two or three years, we would have been facing systemic corruption of our institutions and agencies, like in Mexico," he asserts. Mr Cavallo was appointed governor of the Argentine central bank by the military government during the transition to democratic rule following the Falklands War. He served as foreign minister under President Menem and was credited with improvi

___ Document 17 of 600 Argentines' basic instincts say: stick with the dollar: Currency link may be 'like being married to Sharon Stone' but it makes it harder to deal with the trade deficit, reports Ken Warn. Officials say long memories of financial instability justify the ties: Author: Warn, Ken Publication info: Financial Times [London (UK)] 05 May 1998: 07. http://search.proquest.com/docview/248724813?accountid=28034 Abstract: Foreign investors often ask Argentine officials if they have an exit route from convertibility, the currency board system that links the peso at par to the dollar. "When you are married to Sharon Stone," said one senior official recently, "you do not require an exit route." Since the unlikely alliance between the peso and the dollar was sealed, GDP growth has averaged 7 per cent a year, hitting 8.4 per cent in 1997. There is a historical precedent for this harmonious union - Argentina operated a currency board system in the early years of this century, when it registered its best-ever period of growth. But now the IMF is warning Argentina over its soaring trade deficit, while the strong dollar - and peso - has set local exporters squealing. Should Argentina be looking for a more flexible monetary regime? Full text: Foreign investors often ask Argentine officials if they have an exit route from convertibility, the currency board system that links the peso at par to the dollar. "When you are married to Sharon Stone," said one senior official recently, "you do not require an exit route." Convertibility was introduced in 1991, despite International Monetary Fund doubts, in a last-ditch attempt to halt the repeated bouts of hyperinflation that had laid the economy waste. It worked. Inflation plummeted, and last year price rises were virtually zero. Since the unlikely alliance between the peso and the dollar was sealed, GDP growth has averaged 7 per cent a year, hitting 8.4 per cent in 1997. There is a historical precedent for this harmonious union - Argentina operated a currency board system in the early years of this century, when it registered its best-ever period of growth. But now the IMF is warning Argentina over its soaring trade deficit, while the stron

___ Document 183 of 600 Argentina seeks $6bn loan deal Author: Warn, Ken Publication info: Financial Times [London (UK)] 15 Sep 1998: 07. http://search.proquest.com/docview/248785402?accountid=28034 Abstract: Argentina is seeking to finalise a $5.5bn-$6bn (£3.3bn-£3.6bn) loan package from multilateral lending institutions and local private sector banks to help shield the country from the global economic turmoil. Details of the package, which is expected to include financing from the World Bank and Inter-American Development Bank, will be announced before the end of this month. The loans would be used to tide Argentina over until the end of the first quarter of 1999 should it prove unable to borrow in the debt markets because of continuing financial instability. Full text: Argentina is seeking to finalise a $5.5bn-$6bn (£3.3bn-£3.6bn) loan package from multilateral lending institutions and local private sector banks to help shield the country from the global economic turmoil. Details of the package, which is expected to include financing from the World Bank and Inter-American Development Bank, wi

es 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. "There is a tremendous amount of momentum in the Argentine economy," says Lawrence Goodman, chief economist at Santander Investment. 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. As Brazil loses billions of dollars in foreign reserves, Argentine bank deposits have shown little evidence of capital flight, a sign of maturing confidence in the exchange-rate regime where all pesos in circulation are backed by dollars. Argentina has also bucked the credit crunch for emerging economies and pried open international bond markets with two issues valued at a total of $553 million. Discussions are also under way with commercial banks for a $500 million bridge loan. Another source of cautious optimism is that commodity prices will probably firm slightly nex

___ Document 220 of 400 Aloof attitude is evaporating Author: Dyer, Geoff Publication info: Financial Times [London (UK)] 04 Feb 1997: 02. http://search.proquest.com/docview/248347117?accountid=28034 Abstract: None available. Full text: In common with many other large Brazilian companies, Industrias Klabin de Papel and Celulose took a relaxed view of Mercosur when the free-trade area was founded. With the Brazilian economy dominating the Mercosur region - it provides about 70 per cent of the combined gross domestic product of the four countries - the opening up of the Mercosur region did not represent such a significant opportunity for Brazil as it did for its three neighbours. Many Brazilian companies were concentrating on other markets. Klabin , one of Latin America's largest paper and pulp companies, exports 30 per cent of its production and already had well-established overseas markets, particularly in Europe. However, that aloof attitude to Mercosur is now changing. Klabin is about to become the first Brazilian paper group to set up a production facility in Argentina. The new factory, at Pilar, 60km from Buenos Aires, is set to start production of envelopes and sacks in the second half of this year. The initial investment of $20m in the new facility is modest, but it is an indication of the increa

aspects of Mr. Menem's revolution -- the cut in inflation, which had been a punishing tax on the poor, and the surge of goods. But now the focus has shifted to the negative. Traditionally low unemployment has soared as a result of the privatizations and liberalization, which forced thousands of small and medium-size manufacturers out of business. And new investment tends to be much more capital-intensive, requiring fewer workers to achieve greater output. Tartagal is a case in point. Before 1993, it was a classic company town. State oil company Yacimientos Petroliferos Fiscales provided housing, hospitals, schools and a fat wage for little work. When it was privatized, 3,400 workers got indemnification payments, averaging $40,000. Some set up kiosks or bought taxis. Others set up cooperatives to provide oil-field services and got two-year contracts with the now-private oil company, renamed YPF SA. Since then, a slew of private energy companies have started work in the area, doubling total output. But where an old YPF pumping station used to employ dozens, a brand-new facility owned by Mr. Tizado's company has just three men watching the dials. "The state company used to pay the equivalent of $200 per barrel in costs and sell it for $15," says Edgar Aguilera, area manager for energy company Techint's Tecpetrol SA. "We are here to make a profit." So are oil-service companies like Texas-based Halliburton Co. and Schlumberger Ltd. of France. They have taken over from the cooperatives, which have old equipment and workers steeped in old-fashioned ways. Industry executives say they can't find adequately trained workers in Tartagal and prefer to bring people in from Buenos Aires or elsewhere. The result: Local unemployment has soared to 60% among heads of household. In May, thousands of workers here blocked highways for nearly two weeks, demanding government help. Since then, laid-off steel and sugar workers in nearby Jujuy province have set up their own roadblocks. So too have municipal workers in the northern provinces of Tucuman and Santa Fe and unemployed laborers in Cordoba, the country's auto-production center. In Buenos Aires, 15,000 students took to the streets in late May to demand more education spending. Mr. Menem expects his policies to bring the unemployment rate down to about 15% by year end. But he says the official jobless rates give a false impression, because they don't take account of a huge underground economy. It is only a couple of miles from the Casa Rosada, the presidential mansion, to the Carpa Blanca, the white tent in front of Argentina's Congress where rotating shifts of public-school teachers have been fasting for the past three months. Marta Maffei, a recent retiree who heads the largest teachers' union, says that in real terms, her members earn only 37% of what they made in 1980. They at least are paid in cash; in some provinces, government workers receive bonds, which are immediately discounted by local merchants. "To raise education standards, you need a more efficient state and you need to pay people decent salaries," Mrs. Maffei says. "If the government would start to crack down on tax evaders and curb corruption, maybe we'd have the money." Indeed, many Argentines believe their government could actually live up to the promises of Gen. Peron and some of his liberal forerunners in the 19th century, providing free but good education, paying adequate benefits and offering retraining to the unemployed. And an increasing number of politicians, including many from Mr. Menem's own party, are campaigning on that theme. Eduardo Duhalde is chief among them. The Peronist governor of Argentina's largest province and the heir apparent to Mr. Menem -- who is barred by the constitution from running in the 1999 presidential election -- Mr. Duhalde casts himself as an apostle of compassion through better government. His followers say he is the true torchbearer of Peronism, not Mr. Menem. Mr. Alvarez, the newspaperman, views the promises cynically. Argentines may yearn for a functioning welfare state, but they long ago ceased to hold up their end of the bargain. Few people willingly pay taxes, he notes, and many are still happy to take a government paycheck and do little in return. "It's not that we have a corrupt government," he says. "It's that we've become a corrupt society and we have the government we deserve." Credit: Staff Reporter of The Wall Street Journal

laws. The target was enshrined in Argentina's letter of intent for a three-year $2.8bn extended fund facility from the IMF . The IMF board is due to approve the facility on January 23. If all labour market law rigidities were removed, unemployment could drop as low as 5 per cent by 2000. Unemployment fell to 13.7 per cent in October, the government said last week, from 16.1 per cent in May and a peak of more than 18 per cent in May 1995. Cutting the jobless total by about 2 percentage points a year was "a reasonable projection." But he warned it would not be easy to get labour reform through Congress, or to secure the agreement of the unions, with which the ruling Peronist party retains strong links. Progress was most likely in replacing the severance payment system, which weighs heavily on employers' costs, with a funded unemployment insurance scheme. Compromise was also possible on the law which keeps existing labour accords in place when unions and employers cannot agree fresh ones. As a result, unions have little incentive to negotiate and many labour agreements date back to the 1970s. However, allowing the private sector to compete with union-controlled workers' health insurance organisations was less likely in the short term, he implied. The latter reform, long demanded by Argentine business leaders, was not part of the conditionality of the IMF accord. "I'm confident we will have some news on labour reform by June 1998, the review period for the IMF." Copyright Financial Times Limited 1997. All Rights Reserved.

$3 billion in loans to help Argentina strengthen its financial system and implement further economic reforms. The two loans will "support continued efforts of the government of Argentina to transform its economy and to protect the gains achieved so far," the Bank said in a statement. Calling Argentina "one of Latin America's most successful reformers," the Bank said the country has achieved price stability, opened its markets

another Peronist president who will continue the revolution we started," Mr. 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. Mr. Menem's supporters had said they would pursue all legal avenues to clear the president for a third term, including a Supreme Court ruling excluding his first term, which began in 1989. Opposition parties argued that such a ruling would clearly violate the constitution, and that view was gaining support among certain Roman Catholic bishops and other powerful sectors of Argentine society. Argentine politics are likely to be a lot more orderly over the next several weeks, and that is healthy for both the economy and the political debate here. "This eliminates a big pressure on the economic and political environment," said Raul Buonuome, chief economist at Deutsche Bank's Argentine investment-bankin

___ Document 163 of 500 In Argentina, Acquisition Talks Could Lead to Supermarket Giant Author: By Craig Torres Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 21 Dec 1998: A14. http://search.proquest.com/docview/398755885?accountid=28034 Abstract: In a deal that would create Argentina's largest supermarket group, Promodes SA of France and Argentine buyout fund Exxel Group are in negotiations to buy local retailer Tia SA for about $630 million. The Tia acquisition, which is still in 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. Full text: BUENOS AIRES -- In a deal that would create Argentina's largest supermarket group, Promodes SA of France and Argentine buyout fund Exxel Group are in negotiations to buy local retailer Tia SA for about $630 million. The Tia acquisition, which is still in

ave their fans. It is against this background-barely perceived in Britain, alive in Argentinathat Mr Menem sets off for an actionpacked five-day visit. While he meets Queen Elizabeth and her prime minister, Tony Blair, many of his ministers-notably those of defence, economy, foreign affairs and education-will meet their British counterparts. A service at St Paul's cathedral in London, attended by the heads of Argentina's armed forces and veterans from both sides, will emphasise reconciliation. Some 70 leading Argentine business people will be strengthening economic links, the other main theme of the visit. Britain is the third largest foreign investor in Argentina, after the United States and Spain. Yet deep differences remain. The two countries are close in international affairs, both good allies of the United States. Their troops serve side-by-side as UN peacekeepers. Yet Britain still has an arms embargo against Argentina-a "comic" one, says the foreign minister, Guido Di Tella. Argentines hope it will be ended during the visit, giving way to the export licences that Britain uses for other countries. Yet that would not mean any sudden flow of weaponry. Over the Falklands there is deadlock. The two countries agreed in 1989 to sort out practical issues without prejudice to either's claim to sovereignty. That brought a deal on licensing for oil exploration in a sea area between the islands and the mainland; another is yet to come on fisheries. But both have been challenged-put at risk, in British eyes-this year by Argentine legislators. First came a bill-passed by both houses of Congress, though not yet in lawrequiring companies finding oil anywhere round the islands to pay Argentine royalties. Recently the Senate passed a similar bill, to fine boats fishing-wherever-in the islands' waters without an Argentine licence. To many Argentines-their government is more cautious-why not? Malvinas waters are Argentine waters, period. The islanders, self-governing in internal affairs, still refuse entry to visitors using Argentine passports (except relatives visiting war graves, and, recently, a television journalist). There is no direct air or sea link. As for negotiations on sovereignty (or shared sovereignty, sale

arkets by the global financial turmoil and has urgently been seeking other sources of finance. The financing effort comes as President Carlos Menem prepares to fly to Washington to address the annual meeting of the World Bank and International Monetary Fund on Tuesday. Mr Menem is expected to use his address to the meeting, usually the preserve of finance and economy minsters and bankers, to continue a government campaign to "differentiate" Argentina from other emerging market economies. 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. The Treasury bonds will be aimed at local private pension funds, investment funds and insurance companies. They will be auctioned in monthly tranches of $100m-$200m starting on October 20, and are expected to pay an annual interest rate of about 12-13 per cent. By next March the government expects to have sold about $1bn of the bonds, according to Miguel Kiguel, financing undersecretary, with the remainder likely to be sold before the end of 1999. T

ths to come and could even make Argentina's own dollar-pegged currency more vulnerable. "It all boils down to whether Brazil devalues or not," says Tulio Vera, managing director at ABN-Amro Chicago Corp. "If they do, all emerging markets will be heading south." Argentina is already girding for the fallout from the Brazil crisis. On Wednesday, Mr. Menem's government asked Congress to grant it special authority to adjust tax rates without a cumbersome approval process. And late last week, Argentina announced its intention to privatize Banco Nacion de la Argentina, the state-owned behemoth that is the country's largest bank. The latter move, say analysts, was designed in part to show investors that Argentina was committed to advancing free-market reforms even during difficult times. The government is also speeding up discussions with the International Monetary Fund on a new three-year agreement that would lock the country on a fiscally austere course through 1999 presidential elections. Even before the ink is dry, private economists here are questioning whether the budget forecasts underpinning the deal aren't overly optimistic. One of them is Pedro Lacoste. He has revised his gross domestic product growth forecast down to 4% for 1998. And that's only if Argentina can readily access international credit and Brazil doesn't devalue. Mr. Rodriguez, the vice minister of the economy, says the government is sticking to its 5.8% growth forecast for next year. He adds that Argentina has done everything possible to put its economy and banking system on a sound footing to withstand protracted market volatility. "If there is anything more we could do, we would have done it by now," he says. "But if the word is out to sell emerging markets, that's it, there's nothing you can do." Credit: Staff Reporter of The Wall Street Journal

h exported $6.5 billion to Brazil against imports of $5.3 billion. Economists said the Brazilian measures, even as originally proposed, wouldn't significantly curtail Argentina's exports. Half of the products Argentina sells to Brazil are petroleum products and capital goods, both excluded from the scheme. And economist Beatriz Nofal said Argentine farm products like wheat still would be competitive despite the change in financing rules. Finally, auto parts, another big export, are needed if Brazilian factories are to continue to assemble vehicles. "Nobody has quantified the impact," said Ms. Nofal. "But I believe exports will continue to grow." The dispute is only the latest decision by Brazil that its trade partners see as discriminatory -- and over which Brazil then sits down to negotiate changes. In past months, Argentine businessmen have complained of Brazil's policies on imports of automobiles, pharmaceuticals, lubricants and foodstuffs. They also have criticized domestic tax breaks given by Brazil to draw foreign investment. Diana Tussie, a trade expert at Facultad Latinoamericana de Ciencias Sociales, said the latest dispute will add fuel to demands by Mercosur's smaller members for the creation of a supranational institution that can arbitrate matters. "The lack of institutions, which actually helped Mercosur to get up and running quickly, is now becoming a barrier to the market's development," said Ms. Tussie. For their part, Argentine officials were taking the trade flare-up in stride. "It's logical, just like with the European Union, that problems will arise from time to time," Jorge Rodriguez, Argentina's chief cabinet secretary, said in an interview. "For me, it's not that important." Credit: Staff Reporters of The Wall Street Journal

___ Document 128 of 500 Peron's legacy: As Argentine economy booms, workers fret they'll be left behind Author: Friedland, Jonathan Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 25 June 1997: A, 1:6. http://search.proquest.com/docview/398571774?accountid=28034 Abstract: Differences in economic plans for Argentina's future since Pres Carlos Menem reversed decades of statist policy and embraced free-market principles are examined. Full text: TARTAGAL, Argentina -- Inside the oil-company conference room, executive Javier Tizado talks of big investments, record production and escalating earnings. Outside, beyond the perimeter fence, community leader Andres Zottos talks of big debts, record unemployment and escalating misery. Mr. Tizado and Mr. Zottos both live in Argentina, and both want better lives for their families. But they have wildly divergent ideas about what is best for their country six years after President Carlos Menem reversed decades of statist policy and embraced free-market principles. Mr. Tizado, a managing director of industrial and energy conglomerate Organizacion Techint, wants more privatization, more deregulation and more freedom to compete. Mr. Zottos, a local politician in this humid petroleum-production zone in the northwest corner of Argentina, wants bigger state subsidies and better social protection for his constituents. "The private companies want to have the freedom to turn Argentina into an Asian country," says Mr. Zottos, standing behind a line of tractor-trailers artfully placed to block two of the country's main transport routes during a recent general strike in Tartagal. "But the people," he adds, gesturing to the jobless workers crowding around him, "want a guarantee of a reasonable quality of life." Never have things looked so good for Argentina, at least not since the 1930s, when it was among the 15-richest nations in the world. Economic growth just hit 8% on an annualized basis for the second quarter running, fed by vast new investments in everything from auto plants to vineyards. Inflation, which soared unchecked for years, is nonexistent. And government finances are in such good shape that Mr. Menem boasts that this South American country meets the criteria for membership in the European Union better than many EU members. Yet never has such a broad cross section of Argentines been so bitter about their prospects. In recent weeks, they have taken to the streets and highways by the tens of thousands in protest, riled by near-record 17.3% unemployment and lagging wages. And, like their president, they look east for a point of reference. "The Economic Horror," an antimarket diatribe and bestseller in France, is a bestseller here also. Echoing their counterparts marching across Europe, Argentines are demanding the state guarantee work and social security. Mr. Menem and his supporters in the business community argue that the gap between expectations and the positive macroeconomic numbers will close soon enough, turning Argentina into an Asian-style exporting giant with rising wages and jobs for all. But most Argentines still hold values brought from Europe by their grandparents and parents, values that were reinforced by the paternal promises of Juan Peron. Gen. Peron, the populist caudillo who ran Argentina from 1946 to 1955 and again briefly in the 1970s, created an all-embracing partnership between unions and the state, in which political support was traded for extraordinary benefits. "Argentina was the Switzerland of the underdeveloped world," says Juan Alvarez, a newspaper columnist for Diario Los Andes in Mendoza, a city in western Argentina. "The workers had access to cheap housing, free schools and seaside chalets. The purchasing power was unbelievable." This legacy is dying hard. Most Argentines don't want to live in a place like South Korea or Thailand. They want to live somewhere like the Netherlands, where the state puts emphasis not just on global competitiveness but on the welfare of the people. And the clash between the two visions, aggravated by widening income inequality and the conspicuous consumption of the wealthy, is becoming more acute by the day. The conflict is starting to concern U.S. investors, who during the past two years have sunk $3.5 billion into this country and are expected to plow in $1 billion more this year, according to a local think tank called Fundacion Invertir. Companies ran

Indec , said that industrial output in the first five months of this year was 7.5 per cent up on the same period last year as the rapid advance out of recession continued. Agricultural chemicals, the motor and tyre industries and cement production led the advance. Vehicle production in the first five months of this year was 40 per cent ahead of the same period of 1996. Argentina's economy shrank 4.6 per cent in 1995, hit by the Tequila effect, the wave of financial instability which follow

Argentine market has inextricably linked the country to global trade and capital markets. This now dictates most of the economic agenda. Thus, the idea that Argentina will revert to its old ways ignores economic reality. Furthermore, it greatly misinterprets the discontent among the electorate. The railing at the market -- guaranteed to pick up steam when Lester Thurow, the world's expert on the evils of unfettered capitalism, arrives here for a seminar in mid-June -- is distracting Argentines from the real problem. Even the ersatz market system, with all its anti-competitive leftovers from the past, is an improvement over the 1980s. It is true enough that a 21% value-added tax, high interest rates and 17% unemployment damp enthusiasm for the economic agenda, but solutions to all of this won't happen without another kind of reform. Until Argentina advances its political and judicial systems toward greater democracy and respect for the rule of law, the gains it has made in economic policy will remain in jeopardy and its prospects for long-term prosperity will remain suspect. Argentines know well that they cannot go back to the silly thinking of the "lost decade" of the 1980s. In 1988 President Menem took office six months ahead of schedule because his predecessor, Raul Alfonsin, resigned, calling the country "ungovernable." In 1989, annual inflation was nearly 5,000%. In response to the consuming chaos, the pragmatic Mr. Menem introduced the Argentine Convertibility Law in 1991 and accompanied it with a massive privatization program. In addition to currency convertibility he took other steps to pry open the highly protected Argentine economy. Even through a dramatic withdrawal of banking assets in 1995 sparked by the Mexican peso crisis, the president stayed the course. Some members of society lost privileges and still complain bitterly. But for most Argentines, the combination of stability and growth has left them far better off than in 1989. And yet the country is brimming with civil discontent. In fact, almost all of the clamor against the Menem government is, in the end, a rallying cry against corruption and the unwillingness to devolve power. While Argentines in the private sector have met the challenge to increase their competitiveness, they look around at a political culture that shamelessly flaunts its privileges, guards its power and provides itself impunity from justice. Historically

." Argentina was still one of the most closed economies in the world, Mr Sachs said. Exports as a percentage of gross domestic product were only 9 per cent, the second-lowest among major countries. Only Brazil was lower. "Argentina says it is doing fine by exporting to Brazil, Brazil says it is doing fine exporting to Argentina, but when is Mercosur going to start exporting to the rest of the world?" he asked. Argentina's exports grew 14 per cent last year to $23.8bn, and are forecast to grow 10 per cent or more this year. Last year a third of exports went to Mercosur, the customs union that groups Argentina, Brazil, Paraguay and Uruguay, with Bolivia and Chile as associates. The rise in exports was based in traditional and primary sectors such as agriculture and energy, Mr Sachs said. The country had to diversify, and the government

___ Document 214 of 400 Record Argentine tax take AMERICAN NEWS DIGEST Author: Doman, Matthew Publication info: Financial Times [London (UK)] 05 Feb 1997: 06. http://search.proquest.com/docview/248324925?accountid=28034 Abstract: None available. Full text: Record Argentine tax take A combination of higher taxes and a strengthening economic recovery push

aulo, Brazil's Bovespa index of the 57 most traded shares was up 2.3 per cent by mid-day. Argentina remains dependent on inflows of foreign capital to service its $100bn-plus external debt, and bridge its fiscal deficit, which it aims to cut to around 1 per cent of GDP this year. The country has yet to raise $2bn to complete its 1998 borrowing programme, while next year's needs are estimated at $14bn. News of the negotiations came as Roque Fernandez, the economy minister, prepared to present an austere 1999 budget to Congress in a further attempt to "differentiate" Argentina from other emerging markets. Bank deposits have so far shown no signs of slipping, signalling continuing confidence in "convertibility", the currency board system that pegs Argentina's peso at par to the dollar. Deposits yesterday edged up to $76.9bn, while central bank foreign exchange reserves stood at $24.5bn. The total reserves of the financial system, including a "repo" facility maintained with international commercial banks, stood at $31.5bn. World stocks, Page 52 Copyright Financial Times Limited 1998. All Rights Reserved.

___ Document 281 of 400 Argentina working out spending pact Author: Dyer, Geoff; Fidler, Stephen Publication info: Financial Times [London (UK)] 02 July 1997: 03. http://search.proquest.com/docview/248550580?accountid=28034 Abstract: None available. Full text: Argentina is negotiating a ground-breaking economic programme with the International Monetary Fund aimed at improving the quality of government spending. If the three-year programme, a so-called extended fund facility, is negotiated, it would be the first IMF plan to incorporate issues of good government. The method by which targets can be established, if at all, on qualitative issues has yet to be settled. However, the programme should come into effect about the start of next year. IMF programmes usually target measurable economic indicators such as

ed Argentine federal tax revenues to record levels in January, offering hope the country may be able to make substantial inroads into its fiscal deficit during 1997. Total tax revenue reached $4.36bn (£2.69bn) in January, 13 per cent higher than a year earlier, and marginally higher than the record monthly revenue of $4.25bn of January 1994. The biggest single

n 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. Since the renewed market instability which followed the Russian debt default in July, Argentina has been seeking to assemble a multi- billion-dollar "war chest" of financing from the multilateral lenders and other sources, such as domestic financial institutions. It has requested $2.5bn in loans from the IADB, which are awaiting board approval. A $2.8bn IMF extended fund facility, which the government does not intend to draw down, was agreed early this year. The country has also been a pioneer among emerging market borrowers in securing renewed access to the international capital markets, issuing five sovereign bonds in the past four weeks. However, Arge

t of GDP this year. Continuing growth is predicated on an orderly end to the global market turmoil and avoidance of world recession. "There is clearly a global deflationary impact from the south-east Asian devaluations," said Domingo Cavallo, the former economy minister. "But if the developed countries react with appropriate monetary policies, and if emerging economies, including Argentina, continue on the path of economic reform, then a severe crisis can be avoided." A disorderly end to the crisis is what the Argentines fear most. In particular, an uncontrolled devaluation by Brazil would be a big blow to investor confidence and put "convertibility", the peso's one-for-one link with the dollar, under severe pressure. But at least the authorities have had some experience in dealing with such a crisis. During the "Tequila effect", after Mexico's December 1994 devaluation, a fifth of all deposits fled the banking system. The economy shrank 4.6 per cent in 1995 as interest rates ratcheted up - but convertibility held. Since the Asian crisis returned last month, total bank deposits have risen; analysts agree the banking system is stronger than in 1995. But after shaking off the after-effects of the "Tequila", the last thing Argentine policymakers want is to face another test of fire. "No wonder everyone is talking up the Brazilian plan's chances of success," said one analyst. Ken Warn Copyright Financial Times Limited 1997. All Rights Reserved.

The cereal harvest forecast for the 1997-98 season, expected to reach a record 61m tonnes, was another reason for optimism. Mr Guadagni refused to be drawn on the prospects for the trade deficit. Last week Argentina reported a 1997 trade deficit of almost $4.9bn, compared with a surplus of $49m the previous year. Some analysts have questioned whether Argentina can keep its 12-month accumulated deficit below $5bn, as it pledged to the International Monetary Fund in its letter of intent for a three-year $2.8bn extended fund facility, approved by the IMF board last week. Argentina is committed to consult the IMF if it breaches the trade deficit target and to take "corrective measures". "The deficit will depend on the final result of the harvest and the evolution of commodity prices," said Mr Guadagni. "But the country has a commercial deficit because it is in a very strong process of investment and modernisation." Copyright Financial Times Limited 1998. All Rights Reserved.

ging from Chrysler Corp. to Fidelity Investments to Bristol-Myers Squibb Co. are building factories, opening offices and buying businesses to take advantage of Argentina's growth and its partnership with Brazil in the Mercosur common market. It isn't only direct investors. U.S. pension funds, banks and insurance companies have snapped up billions of dollars in Argentine debt in recent months, attracted by high yields and policies approved by the International Monetary Fund. The Argentine stock market hasn't done badly, either. It is up 27% this year, largely on foreign buying. Wayne Lipsky, for one, is now observing events in Argentina cautiously. As chief investment officer of the $75 billion of fixed-income funds run by New York-based Alliance Capital Management, he appreciates the transformation wrought by Mr. Menem and his ministers. But he also wonders how long the center will hold. "The trickle-down has to be trickling down a little faster," Mr. Lipsky says. That is the crux of the problem facing this resource-rich nation of 33 million. Although Argentines got used to the European-style safety net woven together by Gen. Peron and those who followed him, by the 1980s a vast and inefficient state had bankrupted the country. Cloaking himself in Peronist colors, Mr. Menem swept in from the outback province of La Rioja in 1989 to dismantle it. Faced with 5,000% annual inflation and the legacy of decades of underinvestment in infrastructure and productive capacity, Mr. Menem's team chose shock treatment. They pegged the Argentine peso to the U.S. dollar, requiring a greenback in reserve for every note in circulation. They dropped trade and investment restrictions that were meant to nurture local industry but, instead, guaranteed that Argentine products were shoddy and expensive. And they began selling off $30 billion in state assets, from the telephone company to the airline, to attract the capital and technology to update the economy. Their efforts triggered a boom that made Argentina a darling of emergingmarket investors. The combination of the convertibility policy, which quashed inflation, and trade liberalization, which made higher-quality goods available, set off a consumers' carnival. Auto and appliance sales shot through the roof. Between 1991 and 1994, the Argentine economy posted annual growth of more than 7%. The party was cut abruptly short at the end of 1994 when Mexico devalued its peso and investors fled the region. Fearing the same at home, Argentines yanked $8 billion, or 18% of deposits, from local banks. But Mr. Menem and his team held the line, shoring up the financial system and committing anew to the free-market course. Relieved, Argentines overwhelmingly re-elected him president in May 1995. But while Mr. Menem put emphasis on making the market work and on keeping happy the investors on which Argentina depends, he has done little to retool what is left of government to help people make the transition to a competitive world. Schools are starved for funds. The tax system is regressive and riddled with evaders. Corruption siphons off much of the support allocated to the poor. And an overburdened, politicized judiciary has diminished hopes for effective redress. Mr. Menem defends his emphasis on getting market signals right and says he has taken steps to improve the government's ability to collect revenue and deliver services. "The economy is doing extremely well, and I think most people understand that," he says, adding that "no one has done more" to crack down on corruption and improve efficiency. Mr. Menem blames "subversives" for some of the protests, which in the last few weeks have hit 14 of the 23 provinces. "I believe that in all countries where these transitions have taken place, there have been these protests," Mr. Menem says. "We have to remember this has been a very great and deep transition that Argentina has gone through." Enrique Ruete offers a different thesis. The managing director of Grupo Roberts SA, a financial conglomerate just taken over by Britain's HSBC Holdings PLC, he believes the protests have been whipped up by politicking in advance of October parliamentary elections. But he says there is reason to be concerned. "Unemployment is too high, and the inability of the government to convert its substantial resources into real social solutions is a major problem," Mr. Ruete says. At first, analysts say, Argentines focused on the positive

inflation, budget deficits and the level of foreign exchange reserves. Mr Pablo Guidotti, Argentine minister of treasury, said that over the period of the programme, Argentina aimed to reduce its debt to multilateral institutions such as the IMF and would only draw funds from the IMF facility if the government's access to the markets was closed. "The financial aspect is the least important," he said. The aim would be to have the IMF help improve the quality of government spending and the budget process, and increase the efficiency of tax administration, he added. However, both the IMF and the World Bank are devoting increasing attention to questions of "governance", such as corruption. Economists are also attaching increasing importance to the quality of government as an issue encouraging development. The World Ba

e 61-year-old Little Rock, Ark., native. "Ten years ago, a U.S. ambassador who retired probably didn't know many corporate executives," he adds. That's true for countries such as Argentina, which, a decade ago, had state-dominated economies unattractive to foreigners and anti-U.S. policies. Since Mr. Menem took office in 1989, the year Mr. Todman arrived as ambassador, U.S.-Argentine ties have blossomed. The affair between Washington and Buenos Aires, which Argentine Foreign Minister Guido diTella has half-jokingly described as "carnal relations," has been accompanied by an upsurge in U.S. corporate investment here. American investment, attracted by Argentina's high growth rates and conservative economic policies, grew to $8.1 billion last year from $2.8 billion in 1991. While the Argentine economy is more open nowadays, political contacts remain key, particularly in privatizations and in highly regulated sectors such as aviation. "The private sector views having Todman and Cheek [as representatives] as carrying the implicit backing of the U.S. and of having open access to President Menem," says Mr. Cavallo, now a congressman. Exxel Chairman Juan Navarro says Mr. Todman can get in to see Mr. Menem without formalities and "lends an appropriate American tone" to Exxel's board. "He has given us access, know-how and tactical skill," says Mr. Navarro, who most recently put Mr. Todman to work winning U.S. government backing for Exxel's bid in the airports privatization. The Exxel group includes Sideco Americana SA and Flughafen Frankfurt Main AG. Meanwhile, Mr. Cheek is lobbying Argentine officials on behalf of New York-based Ogden Corp., which is bidding in partnership with two Argentine companies and Italy's SpA Esercizi Aeroportuali. Mr. Todman, a 71-year-old Virgin Islands native known for his regal bearing and demanding management style, says that although he no longer works for the U.S. government, his work helps promote U.S. interests. "When I was a diplomat, I played a major role in helping investors and bankers understand what Argentina could become," he says. "In the private sector, I am helping to make sure the changes that have taken place work." Credit: Staff Reporter of The Wall Street Journal

Argentina's own policies than with what's happening in Hong Kong and in neighboring Brazil, whose own quasi-fixed exchange-rate regime has come under fire in recent days. "Nothing fundamental has changed in Argentina," says J.P. Morgan & Co. economist Alfonso Prat-Guy. "We are in a fragile situation because of what is happening elsewhere." Yesterday, the Buenos Aires bourse's bellwether Merval stock index at first rose on Wall Street's gains, but then tumbled 3.5% on news that at least three medium-to-large Brazilian banks had posted large proprietary-trading losses in the market turmoil earlier this week and had initiated talks with Brazil's central bank. Mr. Fernandez took pains yesterday to stress that asset prices in Argentina hadn't yet become highly inflated as they had in other emerging markets. Nor, he added, would Argentina be forced to tap international markets to fulfill its financing needs anytime soon, a plus given the enormous run-up in emerging-market risk in recent days. The economy minister said it was still unclear whether the impact of this week's market volatility would have a negative impact on Argentina's growth prospects. Next year's budget document, which provides the forecasts used for the IMF deal, calls for GDP growth of 5.8% in 1998. Credit: Staff Reporter of The Wall Street Journal

ll be announced before the end of this month. The loans would be used to tide Argentina over until the end of the first quarter of 1999 should it prove unable to borrow in the debt markets because of continuing financial instability. The funding would be separate from Argentina's existing $2.8bn extended fund facility with the International Monetary Fund, which the government has no plans to draw down. "This should be a very strong signal to the markets that we are well advanced in meeting our financing requirements and help remove any concerns over our liquidity," said Pablo Guidotti, deputy economy minister. Officials stressed Argentina still hoped to meet its financing needs through the markets, and the stand-by funding was intended to be "complementary" to commercial borrowing. A government campaign to persuade foreign investors that the country's economic fundamentals remain strong has so far failed to lift the stock market, which has tumbled in step with neighbouring Brazil. However, some relief came yesterday with the Merval leading share index up 1.7 per cent in early trading to 327.6. In Sao P

bour few immediate local worries. Most of the negatives weighing on the market lie further afield. With its reliance on foreign capital inflows, Argentina has a nervous eye on US interest rates. Any significant tightening of international liquidity could have an immediate negative impact. Last week the market traded nervously in thin volumes as traders watched Wall Street's rollercoaster ride from the sidelines. 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. Another possible negative is the $1.3bn or so of new equity offerings planned for the year's final quarter. This represents more than 2 per cent of the $55bn market capitalisation of the Buenos Aires bourse. "This is a lot to digest and is going to depress prices," said Roberto Guevara of Caspian Securities . Argentina's voracious private pension funds, plus mutual funds and open-ended Latin American funds, would

er the Asian crisis. The country risk premium, as measured by the spread between Argentina's par bond and US treasuries, had fallen from 821 basis points in the immediate aftermath of the crisis to only 485 basis points now, he said. The fall takes the country risk premium to less than it was a year ago, although still above its pre-crisis level of 361 basis points. Local bank's interest rates for their top Argentine corporate clients had fallen to 10 per cent this month from a peak of 15.7 per cent last November. The banking system had also shown no signs of weakening, Mr Guadagni said, rather the reverse. In the first 100 days since the crisis began, bank deposits had risen 7.5 per cent, or almost $5bn. This contrasted with the first 100 days after the start of the Tequila financial crisis in December 1994, when deposits fell 15.6 per cent, or over $7bn. Big companies' investment plans were also unaffected by the recent international financial turmoil, Mr Guadagni said.

olute majority in Congress. The delegation also includes representatives from the Radical-controlled Buenos Aires city government. The trip aims to present the city as a model of efficiency and fiscal responsibility. One task for the Alliance is to convince investors that its embrace of key elements of President Carlos Menem's economic policy - including the currency's one-for-one peg to the dollar - is secure. Regular attacks on the current economic model by Raul Alfonsin, the former president and veteran Radical, point to tensions on economic policy. Ken Copyright Financial Times Limited 1997. All Rights Reserved.

sales appear to be flattening largely because the average price of products sold abroad has fallen by 13.8% since the third quarter of 1996. "Exports are stagnant due to the reduction of commodity prices," he says. Nobody can say for sure whether the downturn in commodity prices is a short-term cyclical phenomenon or a long-term secular trend. What matters is how Argentine companies adjust to lower export prices, and some companies are showing impressive agility, which may be why business confidence here remains high. Officials at Acindar SA, the country's largest producer of nonflat steel with around $600 million in sales, say they will recover lost exports to Asia (formerly about 13% of total exports) by focusing more on South American customers. "We are looking at extraregional markets as opposed to export markets," says Arturo Acevedo, Acindar's president. To protect markets from Asian commodity steel producers and to tighten its grip on customers, Acindar plans on customizing its products by bending and shaping steel before it arrives on the job. Acindar is also investing $80 million to upgrade mills. Some of that machinery will no doubt be imported, an example of why Mr. Kiguel, the finance undersecretary, believes Argentina's trade deficit is a sign of health. "A country that grows fast is likely to import more capital goods from abroad," said Mr. Kiguel. Nevertheless, analysts say, Argentina's economy is growing so strongly today that it must opt for corrective measures now or risk instability at the most undesirable time -- during the election year of 1999. "This economy has a real momentum of its own, and a little tinkering won't do the job," says Geoffrey Dennis, Deutsche Morgan Grenfell's global emerging-market equity strategist. "The recommendation [on the stock market] is to sell into strength" because Argentina will have to wrench down growth sooner or later, he says. Credit: Staff Reporter of The Wall Street Journal

___ Document 89 of 600 Breathing space won but worries remain ARGENTINA $5.7BN DEAL MEETS IMMEDIATE NEEDS FOR FINANCE: Author: Warn, Ken Publication info: Financial Times [London (UK)] 12 Oct 1998: 03. http://search.proquest.com/docview/248740340?accountid=28034 Abstract: Argentina has won a valuable breathing space with the $5.7bn (£3.3bn) financing package unveiled by Roque Fernandez, the economy minister, during last week's meetings of the World Bank and International Monetary Fund. The funds are intended to cover Argentina's financing requirements between now and the first quarter of next year, in the event of the country remaining shut out of the capital markets. But what if the financing drought continues beyond that date? In the current global financial turmoil new bond issues and syndicated bank loans have shuddered to a halt, for Argentina and the rest of Latin America. But Argentina's hunger for foreign capital 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. Full text: Argentina has won a valuable breathing space with the $5.7bn (£3.3bn) financing package unveiled by Roque Fernandez, the economy minister, during last week's meetings of the World Bank and International Monetary Fund. The funds are intended to cover Argentina's financing requirements between now and the first quarter of next year, in the event of the country remaining shut out of the capital markets. But what if the financing drought continues beyond that date? In the current global financial turmoil new bond issues and syndicated bank loans have shuddered to a halt, for Argentina and the rest of Latin America. But Argentina's hunger for foreign capi

ng Argentina's links with Europe and the US. Mr Cavallo said he did not feel his outspoken comments risked undermining investor confidence in Argentina. They reflected a wish to strengthen a democratic system in which economic policy could be applied more efficiently. "In Argentina, it may be some people have been corrupted by the mafias, but there are many who have not. We have institutions that are working and are able to tackle these problems." Since breaking with the ruling Peronist party, Mr Cavallo has been lobbying the business community and seeking to forge ties with smaller parties, political independents and Peronist dissidents. But some observers doubt he will be able to create a powerful political alliance. "Cavallo could well be elected a deputy for Buenos Aires, but I do not see him creating a viable opposition party," said Mr Rosendo Fraga, a political analyst. Mr Cavallo did not rule out a run at the presidency in 1999, depending on the outcome of the mid-term race. Copyright Financial Times Limited 1997. All Rights Reserved.

___ Document 198 of 500 Argentine Companies Find Less Is More --- Conglomerates Shed Diverse Assets to Focus on Core Units Author: By Jonathan Friedland Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 29 Apr 1997: A18. http://search.proquest.com/docview/398606354?accountid=28034 Abstract: In the past few months, hundreds of millions of dollars of assets have changed hands among Argentina'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. 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. 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. Full text: BUENOS AIRES -- Argentina's conglomerates have started a tango which, like the dance itself, involves small moves that add up to something dramatic. In the past few months, hundreds of millions of dollars of assets have changed hands among Arg

boost to revenues resulted from a widening of the VAT tax net and higher taxes on fuels - measures imposed by Mr Roque Fernandez, the economy minister, in July last year, shortly after he took over from Mr Domingo Cavallo, the architect of the country's economic reforms. Matthew Doman, Buenos Aires Copyright Financial Times Limited 1997. All Rights Reserved.

and the private sector had to work together to improve infrastructure and the education system. "Ideas and science and high technology" must be at the core of future export efforts. Pointing to weaknesses in Argentina's institutions, Mr Sachs said export-led growth also required the rule of law, with low levels of corruption and an independent judiciary. Argentina's privatisation policies had been "smart and successful," and there had been a lot of progress in fiscal policy. "Fiscal policy is less in crisis here than in many other parts of the world," especially western Europe, he said. But two other initiatives were extremely important for rapid growth - labour flexibility and tax reform. But reform efforts had become highly politicised and apparently stalemated, he said. Copyright Financial Times Limited 1997. All Rights Reserved.

ished by Banco Tornquist in 1919. "The monetary circulation increased correlatively, business increased in unlooked for degree and the economic development of the country presented the notable success which has attracted the attention of the whole world." Argentina did well with its internationalism until, in the 1930s, the light was switched off on free trade and stable money around the world. Along with the rest of Latin America, Argentina went for protectionism. That set the stage for Juan Peron to add populism and labor unions; from there it was downhill both for monetary stability and the standard of living. Per capita income stagnated; inflation increased; periodic half-hearted attempts at stabilization and reform yielded to whole-hearted moves to nationalize production and print more money. Capital fled the country; soon Argentinians paid their taxes like Italians -- hardly at all -- and formed unions like the British -- with a vengeance. In the early 1980s, only some 3,000 people paid income tax and the big question was why so many did. Unions divided their time equally between working and striking. Hyperinflation was the inevitable last stop of this debilitating process. After some half-hearted measures to stop hyperinflation failed, President Carlos Saul Menem and his uncompromising new finance minister, Domingo Cavallo, introduced the Convertibility Law in 1991. At the outset, hard money meant just recognizing the facts: The dollar had become Argentina's de facto money. The law established a firm rule: fixed parity with the dollar, the dollar as legal tender, no issue of local currency except when backed 100% by dollar reserves in the central bank, and no financing of the Treasury by the central bank. Hard money provided the cover for the urgent reforms: privatization, restructuring of the public sector and elimination of pervasive subsidies. Moreover, the monetary regime withstood tough tests during the Mexican peso crisis. True enough, Argentina has high unemployment -- the immediate counterpart of drastic restructuring and liberalization -- but no politician would dare touch the rule; in Argentina everybody understands that tinkering with the monetary rule means going back to hyperinflation. The old answer of public works is fortunately out of date. The remaining strategy involves deepening flexibility and productivity, and adopting a tax structure that

___ Document 365 of 500 Southern Wisdom Publication info: Wall Street Journal , Eastern edition [New York, N.Y] 04 Nov 1997: A22. http://search.proquest.com/docview/398633179?accountid=28034 Abstract: Politicians from Asia's devalued and troubled economies, rife with crony capitalism, might like to look at the Argentine experience, where six years ago economic chaos reigned and inflation hit an annualized 5,000%. Today inflation is near zero and 8% growth is expected this year. In the election, anti-corruption opposition platforms handily 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. Full text: When Argentina's voters went to the polls a week ago Sunday for mid-term congressional elections they sent a message to their country's leadership: They love stability and they hate corruption. The Argentine story is worth acknowledging in light of recent events in Southeast Asia. Politicians from Asia's devalued and troubled economies, rife with crony capitalism, might like to look at the Argentine experience, where six years ago economic chaos reigned and inflation hit an annualized 5,000%. Today inflation is near zero and 8% growth is expected this year. In the election, anti-corruption opposition platforms handil

___ Document 59 of 600 Havana Author: Fletcher, Pascal Publication info: Financial Times [London (UK)] 23 Oct 1998: 07. http://search.proquest.com/docview/248608557?accountid=28034 Abstract: Argentina, Cuba's second biggest bilateral creditor, has presented a wide-ranging proposal to the Cuban authorities that combines suggested repayment 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. 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. Full text: Argentina, Cuba's second biggest bilateral creditor, has presented a wide-ranging proposal to the Cuban authorities that combines suggested repaym