MercoPress. South Atlantic News Agency

Lavagna in Europe

Argentine Economy Minister Roberto Lavagna currently in Europe to talk about Argentina's negotiations with the International Monetary Fund, IMF emphatically declared to a French newspaper that “we will not assume commitments we can't honor”.

In a long interview in "La Tribune" and in coincidence with his arrival to Paris, Mr. Lavagna is quoted saying that "technical conditions for signing an agreement with the IMF have been standing since August?.maybe they could demand further compliances if we were asking for fresh money, but this is not the case".

Mr. Lavagna is scheduled to visit, France, Germany, Italy and Spain where we want to describe the real situation of Argentina's economy that is still very much influenced by "negative forecasts" of several months ago.

"Reality is quiet different, GDP has increased for two consecutive quarters, it's forecasted to grow this quarter, and we are betting on a 3% growth in 2003, when even the Spanish banks are estimating growth at 4,5%".

However Mr. Lavagna also admitted that Argentina did not comply with 15 of the last 19 agreements signed with the IMF, "and we're not going to start again with that record".

But Mr. Lavagna's optimism will also have to confront the demands of French, German, Italian and Spanish investors, particularly in the public utilities sectors that are demanding a strong rise in rates, 30%, while the president Duhalde administration has only accepted 9%.

"Of the 59 contracts that have been affected by the freezing of public utilities rates, not one of them doesn't cover operative costs, although they do have an influence on investment returns", said Mr. Lavagna adding that "what's the purpose of increasing public utilities rates when people can't pay for them?".

Three French heavy investors in Argentina in electricity, oil and gas, and waterworks and sewage, have appealed to the bilateral agreement that guarantees investments against "government acts or omissions".

French government officials have said that the companies' demands are legally legitimate and their problems "real", but we also have an understanding of "the difficult situation that Argentina and its people are suffering".

Next stop Germany. Good luck Mr. Lavagna.