MercoPress. South Atlantic News Agency

Argentina's heterodox mix of policies still “unconvincing”

Financial investors feel disappointed with President Nestor Kirchner's administration and are demanding fiscal and monetary policies corrections to dominate inflation and ensure sustained growth before they begin to consider putting money into Argentina's sovereign bonds at reasonable rates.

Allegedly this was the homogeneous message received by Argentine officials from investment banks during their recent visit to New York and confirmed to the Argentine press by Wall Street investors at forums organized by leading banks on the side of the International Monetary Fund annual assembly in Washington. Banks mentioned are Merrill Lynch, Credit Suisse, JP Morgan, Citigroup and Deutsche Bank. Investors feel disappointed with Argentina's manipulation of official economic data; strong expansion of government spending; doubts about interest rates policy and pressure on banks; maturing of a significant volume of debt next year and the aggressive speech towards foreign bankers and investors. They make up the complain cocktail which was transmitted to the delegation headed by Argentina's Finance Secretary, Sergio Chodos. "On the one side it's positive that Argentina is a robust commodities exporter, but on the other the country continues to depend on financial markets and there's uncertainty about inflation, the fiscal situation, monetary policy and the strong growth, and this is questioned not because of the elections but rather over which is the path the next administration will take, so far unknown", said Tulio Vera head of macro analysis strategy for Merrill Lynch. Vera points out that in this context no matter how much the Argentine government insists about making corrections in government expenditure and the public utilities rates, "the heterodox mix of policies implemented in the last few years is not sustainable, and in the medium term will have to be addressed or face serious misbalances as is currently happening". And why should Argentina follow that path if it feels the economy is working? "Simply because investors put all cases on the table and when they look at Argentina they feel the risk is higher", said Vera. Charles Dallara from the International Institute of Finance was equally blunt, "do you believe you can change the rules all the time and pay no cost? The world is full of opportunities to invest and nobody is going to choose Argentina because it's Argentina and much less if investors are treated badly". However President Kirchner administration is optimistic since they believe Brazilian and Chilean corporations will keep investing in Argentina.