MercoPress. South Atlantic News Agency

Breaking News.

Headlines: Chile:Prospects for fuel prices; Argentina's ex-pat remittances; UK budget in the red; Nottingham professor in Magallanes; Optimistic Chile;

Prospects for fuel prices

Chile's government oil company, ENAP, CEO Daniel Fernández in a brief visit to Punta Arenas forecasted that fuel prices in the country will begin dropping in two weeks time, because there's a two weeks refining lag between international market and domestic prices. "Given the drop in international prices during the last two weeks, this will manifest itself in lower pump prices for the Chilean consumer", said Mr. Fernández adding that the current decrease is direct consequence of the beginning of the war and the end to uncertainty regarding the possibility of a conflict in Iraq. Mr. Fernández further explained that given the uncertainty previous to the war, the volume of future oil contracts increased and demand now is tending to normalize, besides the fact that "if the conflict is kept to four weeks, analysts anticipate the oil barrel will stabilize at 28 dollars". However if the war lasts more than six to eight weeks, with growing instability in other Arab oil producing countries, uncertainty will return to the oil markets. "The possibility of a long conflict will have an impact in the region's oil transport logistics, and prices could reach a new ceiling", stressed Mr. Fernández. ENAP's CEO also indicated that a drop in prices fro Chile in the coming weeks would be particularly noticeable in heating oil prices since the winter season is practically over in the northern hemisphere. Regarding natural gas, the main fuel in Punta Arenas both for home consumption and industry, --the huge methanol complex--, Mr. Fernández underlined that ENAP has its own production, long term contracts with foreign suppliers and "it's the most stable of fuel markets regarding prices". "Price adjustments will be minimal compared to other liquid fuels", said Mr. Fernández. Mr. Fernández also announced that ENAP will be investing 32 million US dollars in Magallanes Region, almost 50% over previous years. Of that sum 9,9 million will be directed to increase diesel production and storage capacity, while the remaining 22,4 million in infrastructure for the fourth Methanex plant, expansion of the current gas pipeline and optimizing the Poseidon platform production. Finally Mr. Fernández revealed that ENAP in 2002 managed a profit of 132 million US dollars, of which 45 million came from the company's business, mainly refineries, in Magallanes Region.

Argentina's ex-pat remittances

Argentina has joined the club of Latinamerican countries where remittances from locals working overseas has become an important item of the country's accounts. According to a paper presented at the Inter-American Development Bank. IDB, annual assembly being held in Milan, Italy, during 2002 remittances from Argentines working overseas to their families represented 184 million US dollars, an 80% increase over 2001. However this is still insignificant compared to the premier league of Latinamerican countries headed by Mexico with 10,5 billion US dollars; Brazil 4,6 billion; Colombia 2,4 billion; Guatemala 1,7 billion; Peru 1,3 billion and Cuba 1,13 billion US dollars. Most of these countries remittances come from the United States, (for Brazil Japan must be included) although there's a gradual increase from Spain, Italy and Germany. But there's another reason why Argentina is a newcomer to the league and that is that for decades the country hosted thousands of Paraguayans, Peruvians and Bolivians who made remittances to their countries. When the current financial and monetary situation exploded in 2001, great numbers of them left Argentina and the remittances of Argentines overseas emerged strongly. Another interesting point in the paper by IDB analyst Donald Terry is that the annual 32 billion US dollars remittance to Latinamerica pays a surprising --and outrageous--, 10% in money transfer costs, 50% above what Indians in England and Turks in Germany must disburse. IDB announced its planning a plastic card system to cheapen money transfer costs that will be announced in the coming months.

UK budget in the red

The United Kingdom participation in the coalition against Iraq could generate a £ 12 billion deficit in the coming budget according to Roger Bootle, economic advisor to Deloitte and Touche. In an interview published in The Observer, Mr. Bootle says that the cost of war could be significantly higher that is currently presumed forcing the Tony Blair government to increase spending plans by several billions of pounds in the second half of 2003. Mr. Bootle argues that taxes will have to be increased by £ 7 billion to restore caution to public finances and anticipates the UK economy will have to reduce its growth estimates in each of the next two years by 0,25%. In the coming budget presentation next April 9, Chancellor of the Exchequer Gordon Brown is expected to announce that the government will borrow £ 34 billion for the financial year 2003/04, which is considerably more than the £ 24 billion of the November pres-budget report. The Deloitte and Touche indicates that direct costs of military action will absorb £ 4 billion of the additional borrowing. Apparently the budget contemplates £ 1,75 billion for war costs plus a £ 2 billion drop in tax receipts.

Nottingham professor in Magallanes

A British scientist from the University of Nottingham is currently lecturing in Magallanes University in the frame work of an exchange program sponsored by the British Council and the Chilean Science and Technology Fund. Professor Jon Clare, an expert in electronics and applied mechanical electricity is collaborating with a Magallanes University program to develop wind energy. The three years exchange includes sending Chilean scientists and advanced students to British Universities. Professor Clare interviewed by Punta Arenas press said this is the second joint project of the Electronics Department of both universities, "and together with other British specialists we're collaborating with our Magallanes colleagues in the elaboration of experimental computer models". The University of Magallanes had been working for years developing alternative energy sources particularly from the wind, Aeolic energy. "The academic level in Magallanes is very high, and proof of this is that many results of joint experiments have been published in scientific magazines", said Professor Clare.

Optimistic Chile

Chile's economy performed better than expected in the last quarter of last year and the momentum seems to be holding during the first quarter of 2003, according to Chilean Economy Minister Nicolás Eyzaguirre. Mr. Eyzaguirre who's participating in the annual assembly of the Interamerican Development Bank being held in Milan, Italy, said that the 3% of the last quarter will help the overall 2002 expansion of the economy reach 2,1% that is above the original estimate of below 2%. "Economic growth is above expectations; domestic demand begun pushing consistently towards the end of the year and recorded a 4% increase over the last quarter of 2001", indicated Mr. Eyzaguirre. With possibly the most open economy of the continent, Chile also suffered the consequences of the regional crisis particularly with a considerable drop in sales to Argentina and Brazil. Overseas trade represents 60% of the country's 65 billion GDP. "Domestic demand helped compensate the drop in regional sales. A strong expansive monetary policy since 2001 began to emerge in record home sales and in a very strong domestic retail demand" added Mr. Eyzaguirre, who undoubtedly optimistic about this thrust pushing into 2003 cautioned that "much depends how the Iraq conflict and oil prices evolve". "We originally estimated 3,5% for this year, so barring any geo-political event from the Iraq conflict, the economic acceleration should be above that estimate". For oil dependent Chile, "if the price of petroleum drops, as seems the tendency, and copper prices turn bullish, this should be enough to sustain the current thrust", said Mr. Eyzaguirre who confirmed that primary data indicates that growth in the first quarter of this year remains at 3%.