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Ms.Krueger gladly surprised with Argentina; Uruguay to extradite accused terrorist to Egypt; Fed warns about US economy weakness; S unemployment grows for the third month.

Ms. Krueger gladly surprised with Argentina

Anne Krueger, Deputy Managing Director of the International Monetary Fund, IMF, confessed in Paris that she was gladly surprised with Argentina's economic performance, particular the strong growth without hyperinflation. "The Argentine economy has managed a notable stabilization. To everybody's surprise, including myself, the economy has started to expand again without having fallen into a hyperinflation situation", said Ms. Krueger to the French financial daily La Tribune. However, the number two in the IMF added that Argentina still has much work ahead before reaching a sustainable growth, and "important problems subsist, which must be solved, mainly in the banking system". Among other pending issues Ms. Krueger who was staunchly opposed to any financial assistance to Argentina, underlined that Argentina still has to begin the restructuring of its foreign debt on which it defaulted January 2002. "They still haven't met with private creditors and bond holders", said Ms. Krueger adding that the IMF-Argentina transitory program ends next June. "We'll have to resume talks with the next government to see what they exactly want to undertake", stressed Ms. Krueger. Her remarks differ with the official information from the Argentine Economy Minister, Mr. Roberto Lavagna who negotiated the agreement with the IMF and has repeatedly stated that the program extends until next August. Besides Mr. Lavagna reportedly will remain in his cabinet post if the leading candidate in the coming presidential run off next May 18 and sponsored by caretaker president Eduardo Duhalde, governor Nestor Kirchner is elected. Regarding the current world economic uncertainty Ms. Krueger described Latinamerican economies as "relatively strong", adding that the region has lesser capacity to absorb external shocks than for example Southeast Asia. "It's easier to absorb the impact in trade deterioration when your exports represent 20% of GDP, than when they represent 5%", underlined Ms. Krueger. For months Ms. Krueger and IMF staff repeatedly collided with Mr. Lavagna, but finally reached the transitory agreement, --with no fresh funds and that only postpones payments--, when Argentina was only minutes away from defaulting with the multilateral credit organizations. Argentina defaulted on 128 billions US dollars privately held debt on January 2002.

Uruguay to extradite accused terrorist to Egypt

An Egyptian citizen arrested in Uruguay more than four years ago is to be extradited to face charges for the 1997 massacre of 22 European tourists at Luxor Temple, the Montevideo press reported Saturday. Reportedly the Uruguayan Supreme Court agreed to the extradition of El Said Hassan Al-Mokhis after Cairo promised he would not face the death penalty. Uruguayan law forbids extraditing suspects to countries where they can be exposed to a penalty more severe than that applied for the same offense in Uruguay, which does not have capital punishment since the early 1900. Al-Mokhis was the subject of an Interpol arrest warrant when he was detained by Uruguayan immigration authorities on Jan. 29, 1999, while trying to enter the country by land from Brazil with a false Malaysian passport. Egypt requested his extradition soon afterward. The request was approved by two lower courts, but the suspect's Uruguayan lawyer appealed to the Supreme Court, asserting that Cairo could not offer the necessary due process guarantees. Egyptian authorities insist Al-Mokhis belongs to the Islamic fundamentalist group Gama'at al-Islamiyya, accused for the tourist massacre at Luxor and supposedly linked to a South American branch of al Qaeda operating as funds collector among the Arab population in Mercosur.

Fed warns about US economy weakness

The United States Federal Reserve this Tuesday kept the basic interest rate unchanged at its 41 year low of 1,25%. However the Fed warned that the US economy is in danger of further weakness since the latest data regarding production and employment, --in spite of the fact that they reflect decisions previous to the end of hostilities in Iraq--, "is disappointing". The Federal Open Markets Committee kept the main federal funds rate for overnight loans between banks at 1,25%. The fall in oil prices following the end of fighting in Iraq has contributed "to strengthen consumers confidence and has strengthened stock markets", indicated the Fed which should help promote an improved economic climate, although it's uncertain when this will occur. Since early 2001 when the US economy suffered a three quarters recession, the Fed has cut interest rates on a dozen occasions with the hope of stimulating domestic demand that represents 70% of the US economy. However in the last four months of the current year, 525,000 jobs have been lost and businessmen are cautious about investing. The Bush administration that now faces a hefty deficit after three years running of budget surpluses is currently involved in a crusade in Congress to have a massive tax cut program approved. However not even all Republicans are convinced of the initiative. The Fed, whose main job is to fight inflation, has also warned that there are risks that the current situation could lead to "a substantial and undesired" drop in prices. Markets analyst coincide that the Fed's message was that a slide to deflation was at the moment a greater risk than a pickup in inflation, and that "it's obvious that there is more that is troubling the US economy than troubles in the Middle East". Nevertheless it was accepted that if the Fed had effectively cut rates, the perception would have been that there was serious trouble ahead for the US economy.

US unemployment grows for the third month

United States unemployment reached 6% during April, against 5,8% in March, the third month running increase, according to the latest release from the US Department of Labor. The latest index means that 8,8 million Americans are out of a job currently. A total 48,000 job cuts took place in April with the manufacturing sector hardest hit with 95,000, and 10,000 in retailing. However government created 32,000 jobs and the construction industry expanded another 18,000. Analysts are divided as to how much longer unemployment will continue to expand, since manufacturing goods orders in March increased 2,2%, the best since July 2002. White House spokesman Air Fleischer admitted the administration's concern but insisted that "Congress must not lag in its responsibility to approve the job and growth package". Congress is currently considering a much disputed ten year 350 billion US dollars tax reduction program targeted to get the US economy rolling again.