MercoPress. South Atlantic News Agency

President Duhalde optimism

Argentine president Eduardo Duhalde said that the country would reach an understanding with the International Monetary Fund before November 9th when Argentina must honour a 250 million US dollars debt with the World Bank.

"We're on course, negotiations are advancing", said President Duhalde adding that progress so far indicates "we can have a degree of optimism". President Duhalde remarks follow a loquacious week in which he said Argentina was showing signs of emerging from the economic prostration it has been experiencing for the last nine months, "the worst of the crisis is over and we can now see a little light of hope, let's strengthen that light".

During the radio program "Talking with the president", Mr. Duhalde expressed that "we've through four years of recession, which turned into a depression, but all economic analysts are anticipating growth for the coming year, that is: the recession in Argentina is coming to an end".

However Argentine economists from different schools admitted that there was evidence of a halt in the falling of economic activity indicators, but rejected the idea that there were signs indicating recovery had begun.

Three distinguished economists Aldo Abram, Miguel Angel Borda and Manuel Solanet coincided that the Argentine economy had reached a plateau, but recovery was linked to a confidence boost, clarity in the political horizon and an agreement with the IMF. "There are no signs to confirm the recession is over, we only have signs the fall has moderated", said Mr. Abram. "The economy has landed, it stopped falling, but there are no symptoms of the beginning of a recovery. So far we've had a quarter with no drop in the GDP, technically you need two consecutive quarters to be so affirmative", indicated Mr. Broda. "It's too premature. Because we've ceased to fall does not mean we're recovering. Industries linked to export markets and import substitution are showing signs, but domestic demand remains flat. We need to recover confidence that so far remains absent", expressed Mr. Solanet.

An agreement with the IMF, after nine long months of bickering, is crucial for the Duhalde administration because from November to May Argentina must pay back to multilateral organizations 9, 25 billion US dollars, equivalent to the total of the country's international reserves.

This has divided the cabinet with Economy Minister Roberto Lavagna totally against touching the reserves.

Besides the IMF is demanding that public utility rates (a powerful government instrument to keep inflation down), be increased. Public utilities are mostly foreign owned and are pressing for a cut in losses and quick return to profitability.

Mr. Duhalde who will be handing office next May 25 has said that "We're not going to tie the hands of the coming elected government. We're going to act with utmost responsibility, but we must also admit Argentina has begun a slow economic recovery with no external assistance".

This however has another side, official unemployment in Argentina stands at 21,5%, 53% of the population live below the poverty line and this year's GDP is expected to drop 15%.