MercoPress. South Atlantic News Agency

IMF forecasts Argentina's recovery

Argentina is forecasted to grow 3% this year and 4,5% in 2004 according to the International Monetary Fund, IMF mid year World Economic Outlook released this week in Washington.

The report indicates that "industry and construction are experimenting strong growth" since late 2002, adding that inflation was kept in line in spite of the devaluation of the currency partly "because of the strict control over public expenditure". "Argentina has clearly stabilized", admitted IMF Executive Director Horst Koehler.

The IMF World Outlook forecast has turned into a sweet revenge for Argentine officials currently in Washington since last September the IMF was anticipating that Argentina was on the verge of hyperinflation and the GDP would collapse 16%. The Argentine economy actually contracted 11% in 2002.

Argentine Economy Minister Roberto Lavagna together with Central Bank president Alfonso Prat-Grey and their team of high officials are involved in a round of talks with multilateral credit organizations and the United States Treasury in Washington where they are pressing for even more optimistic indicators.

Mr. Lavagna delegation is trying to convince IMF Western Hemisphere Director Anoop Singh that Argentina this year will expand 4% and inflation will be 14%, several points below the IMF forecast of 22,3%.

During the release of the IMF forecast Mr. Kenneth Rogoff head of the IMF Investigation Department talking about Argentina said that "clearly it has a hiatus at the moment from its long economic fall. We saw a recession where output cumulatively fell by more than 20%, which is a much larger than one sees almost anywhere over the past century outside conflict zones, and at the same time, Argentina had an enormous real depreciation of its exchange rate, 40 to 60% depending on how you measure it. And they've been given the rollover of IFI debts, and the temporary non-payment of debts to the private sector.

This has provided some reprieve for growth, but it's very important that after the elections in the spring (April27), that there be movement on many issues such as establishing a sustainable fiscal situation, on banking reform, on having a monetary anchor, issues which are certainly in the forefront of policy".