MercoPress. South Atlantic News Agency

Menem picking up

Former president Carlos Menem is the only pre candidate for the coming Argentine presidential election that seems to be picking up support according to the latest opinion poll published in Buenos Aires last weekend.
Forecasting an upturn in Argentina; Pending differences with the IMF

Mr. Menem grew three points and now stands second behind Adolfo Rodríguez Sáa who has begun declining together with Elisa Carrió, the left wing candidate who a few months ago seemed unstoppable. However reflecting Argentina's electorate rejection of the political system all candidates are below 20% vote intention, Mr. Rodríguez Sáa figures with 18,3% (19%) ; Mr. Menem, 15,8% (12%); Elisa Carrió, 11,1% (19,3%) and Néstor Kichner 8,1% (9,1%). The poll was done by Ipsos-Mora y Araujo involving 1,200 interviews between October 18th and 24th. According to the Argentine electoral calendar primaries should be held simultaneously in all parties next December 15th, and the presidential election March 30th. However the primary process has been temporarily suspended by a judicial ruling following internal fighting among Peronist pre candidates. The poll also indicates that 41% of those interviewed believe Mr. Menem will be Argentina's next president. His closest rival Rodríguez Sáa only recorded 18%. But in an open contest with the participation of Santa Fé governor Carlos Reutemann, who has repeatedly denied presidential ambitions, the former F 1 pilot would be the ideal candidate with a 41% support followed by Rodríguez Sáa and Elisa Carrió each with 29%. Mr. Menem only figures in sixth place with 19% support. In the Peronist primary, Mr. Menem leads with 32%, followed by Rodríguez Sáa with 26% and Nestor Kirchner, 15%. And confirming Argentine electorate dissatisfaction with the current political situation only 17% of those interviewed said they would participate in the primaries. Finally 33% of Argentines favour advancing the election scheduled for March 30th. This last week only two tickets formalized their candidacies in the Peronist Party, Mr. Menem with Salta governor Juan Carlos Romero, and Adolfo Rodríguez Sáa with Melchor Posse. The other Peronist candidates, Mr. Kirchner and José Manuel de la Sota did not register and are threatening to run as independents.

Forecasting an upturn in Argentina

Some encouraging signals from the Argentine economy anticipate that the country may finally have begun to recover according to the spokesperson for the Duhalde administration. In his latest press conference cabinet Chief Alfredo Astanoff said the Argentine economy had recorded its second consecutive positive quarter, and if the tendency continues, "we'd be in a similar situation to 1998 and technically in the upturn from recession". Mr. Astanoff based his optimism in the fact that inflation in October will be below 1%, the lowest so far since president Duhalde took office last January; international reserves have increased 800 million US dollars after purchases of 1,1 billion US dollars in the local market; current accounts in banks are growing and 75% of money recovered from the "corralito" has returned to the financial system; the US currency has stabilized in the local money market and interest rates are dropping. Another promising sign is Economy Minister Roberto Lavagna's trip this week to Washington to meet IMF officials to iron out "details of conditions" that will enable Argentina after almost twelve months to have, hopefully, access to funds. Last week the Economy Ministry publicly revealed that following two months of discussions with private holders of Argentine bonds, the country will begin considering re-negotiation terms in November. Last January Argentina defaulted on 95 billion US dollars of foreign debt. Argentine Central Bank figures indicate that last June 30th, 50,9 billion US dollars in sovereign bonds were in private hands and debt with multilateral organizations stood at 31,7 billion US dollars. Previously Argentina had conditioned negotiations with private bond holders to an agreement with the IMF. Argentina will contract an international financial advisor to renegotiate its foreign debt.

Pending differences with the IMF

In spite of the Duhalde administration cautious optimism about the evolution of the Argentine economy, differences with the International Monetary Fund remain and as happened so many times before, negotiations could yet end in another frustration. The draft of the IMF letter of intention includes three main contentious issues: a 20 to 30% increase in public utilities rates, but the Argentine government only admits 10%; free flotation of the dollar, however the Duhalde administration is reluctant in complying with the elimination of all restrictions, --as demanded by the IMF--, until the full impact of the Socialist candidate Lula victory in Brazil and the Argentine electoral campaign are over, thus avoiding speculation in the financial market; finally the IMF is against a debt compensation program in the banking system with Argentine bonds. "Banks need funds to resume lending", argues Economy Minister Roberto Lavagna. Mr. Lavagna believes that the Argentine economy after growing 0,5% in the third quarter should manage 0,6% in the last quarter, with a similar quarter acceleration during 2003, ending with an accumulated 3% for the whole twelve months. However these estimates represent drops of 9,8% and 4,3% in the last two quarters of the current year compared to 2001. Exports in 2003 are estimated to grow 8% and imports will jump from 9,5 billion to 13 billion US dollars. Consumption is expected to increase 3% after dropping 13% in 2002 while investment is projected to grow 20% after collapsing 38,5% in 2002. That is half the volume of 1998 when they reached 61 billion US dollars. "Recovery will be closely linked to home consumption and exports but investments will be conditioned to a normalization of Argentina's financial relations with the rest of the world", said Gabriel Sánchez, chief economist of the private financial assessment foundation Mediterráneo.