MercoPress. South Atlantic News Agency

Markets trust test for Mr. Lavagna

Incoming Argentine Minister of Economy Roberto Lavagna confirmed a floating currency, no price controls and a clear willingness to follow and comply with the reforms demanded by the International Monetary Fund, IMF, according to interviews in Buenos Aires Sunday newspapers.

"It's a full opening, we must give oxygen to the economic activity of the country", said Mr. Lavagna dispelling all fears about the continuation of the eight days compulsory banking and exchange holiday. "No fixed exchange rate, while I'm in command, free markets", insisted the sixth Argentine Economy Minister in just over four months. Mr. Lavagna said he was not frightened about how the foreign exchange market will react this Monday in Buenos Aires financial district. "I believe there's been an overreaction of the market, and the US dollar should remain in range of the closing exchange rate of April 19th, that is 3,15 pesos in bank trading and 3,28 pesos in street trading", stressed Mr. Lavagna.

Last January sixth the incoming Duhalde administration ended the eleven years pegged exchange rate of 1 peso to 1 US dollar, creating havoc in financial markets and further infuriating Argentines by converting US dollars deposited in banks into pesos.

Mr. Lavagna also underlined that there will be no price control in spite of the fact that April's inflation is expected to rocket 10%.

"Our aim must be to calm markets and offer reference points, which now are absent", added the new Economy Minister.

Mr. Lavagna revealed he's already had contacts with IMF officials and the US Treasury Under Secretary John Taylor.

"An agreement with the IMF is the quality, reliability certification Argentina needs to recover international credibility and trust. President Duhalde has agreed this will be official policy, which also has the backing of the political leadership supporting the current coalition", indicated Mr. Lavagna.

Last week the Argentine Congress approved a bill effectively curtailing the "leakage" of frozen bank assets which threatened with a complete collapse of the financial and banking system of the country.

Mr. Lavagna, is an economist educated in Buenos Aires and Belgium with a long experience in government posts, both with Peronist and Radical governments, (Argentina's two main political forces). He was currently Argentina's Ambassador before the European Union in Brussels and is considered an expert in international trade affairs. He recently managed an extension of the EU Hilton beef quota for Argentina and the lifting of the ban on Argentine beef.

During the first Argentine democratic government in the eighties he was instrumental in the founding of Mercosur and advisor to the Inter-american Development Bank. Mr. Lavagna has taught in several universities, was a researcher in Harvard University and is a member of CARI, Argentine Council of Foreign Relations.