MercoPress. South Atlantic News Agency

Argentina: Lavagna predicts 4,2% expansion.

Argentina' Economy Minister Roberto Lavagna predicted that the country's economy would expand this year 4,2%, although inflation will reach 14%, four points above the February announcement.

"The long four years recessive cycle began to be left behind in mid 2002, and now we can expect a 4,2% GDP growth this year", said Mr. Lavagna addressing a group of Italian businessmen in Milan who represent investors in Argentina.

Mr. Lavagna pointed out that the recovery was achieved in spite of the lack of financing, and although "experts and academics like to attribute this growth solely to the export sector, may I remind you also that consumption represents 75% of Argentina's domestic demand".

The Minister recalled that prolonged negotiations with the International Monetary Fund, IMF, "didn't make things easy, but anyway we managed to stabilize the situation. They (IMF) were predicting hyperinflation and a chaotic scenario towards the end of 2002, which did not happen and they did not adapt, insisting with their original diagnosis".

Argentina currently has a limited roll-on understanding with the IMF that extends until next August, giving the following government (that will take office next May 25) three months to prepare a long term agreement.

Among other achievements Mr. Lavagna mentioned the creation of 860,000 jobs between last May and October (530,000 with government financed plans), and eleven consecutive months of primary budget surplus.

However Mr. Lavagna also had harsh words for his predecessors emphasizing that the abundant liquidity of the nineties led "both government and private agents, local and international to incur in unnecessary risks, which in many cases can be clearly defined as an outright irresponsible investment of funds".

"We've put an end to those fantasies that argued that Argentina would grow 10% annually indefinitely. We're all grown ups and know perfectly well how these fantasies tend to end".

Argentina, currently ruled by the caretaker administration of President Eduardo Duhalde, will be holding presidential elections next April 27.