MercoPress. South Atlantic News Agency

11,5 billion US dollars fled Argentina in 2002

According to the Argentine Statistics and Census Office, Indec, last year 14,486 billion US dollars fled the country, a 246% increase over the 4,668 billion of 2001. The situation can be explained by the 12,097 billion US dollars the negative balance of the country's private non financial sector that amassed assets overseas estimated in 10,384 billion.

The most critical moment was the second quarter of 2002 when almost 5 billion US dollars fled Argentina in coincidence with a peak of political uncertainty, although by the fourth quarter the situation began to stabilize and only 1,27 billion left the country.

Indec also points out that in 2001 the Argentine Central Bank lost 12 billion US dollars in reserves, while in 2002 the loss was 4,437 billion US dollars.

In December 2002 the Central Bank international reserves stood at 10,476 billion US dollars. Apparently in July 2002 the situation began to improve with the stabilization of the exchange rate and when the Central Bank became a net positive purchaser of US dollars in the local market as confidence started to build up.

However the Indec report also indicates that the international reserves situation began to improve when Argentina suspended payments to international financial organizations. Last March 19th, Argentina's international reserves amounted to 10,322 billion US dollars.

In December 2002 Argentina's foreign debt was equivalent to 134,340 billion US dollars, after having experienced a 3,374 billion increase in the last quarter of the year.

Marcelo Dimenzon, head of Indec International Accounts added that Argentina's current account balance managed an 8,954 billion US dollars surplus in 2002 compared to the 4,483 billion deficit in 2001.

The good news is directly linked to the ample trade surplus of last year, 16,883 billion US dollars, when Argentina exported 25,352 billion and imported 8,469 billion.

But Mr. Dimenzon also argues that during that period, following the December 2001 default, Argentina did not honour payments (capital and interest) equivalent to 8,120 billion US dollars.

The boost in Argentine exports is closely related to better prices for commodities (petroleum, soybeans and sunflower oil) and the reopening of foreign markets to Argentine beef.

As to the exchange rate vis a vis the US dollar, the report indicates that after breaking the one to one conversion system, in the first six months of 2002 the peso depreciated 260% and then began gradually recovering reaching 3,44 pesos to the dollar last December. However the peso continues to recover and in late March the exchange rate was 3 pesos to the US dollar.

Independent economist Miguel Bein claims that the massive loss of funds in 2002 proves that following the great devaluation of the Argentine currency, the Central Bank was unable to check the fleeing billions including most of the trade surplus.

However Mr. Bein concedes that given the greater current macroeconomic stability, "a reversion of the phenomena can be expected".