MercoPress. South Atlantic News Agency

“Growth budget” for Argentina.

The 2004 Argentine budget that was sent this Monday to Congress is a “growth budget” with significant increases in investments, and not an “adjustment budget”, said Argentine president Nestor Kirchner.

"Significant investments are programmed in several areas. You can check it going through the draft we sent to Congress", indicated President Kirchner.

Economy Minister Roberto Lavagna anticipated that the budget contemplates increases in social expenditure, education, scientific research and public works equivalent to two billion US dollars.

The 2004 budget estimates a GDP expansion of 4% and an annual inflation of 7,5% with the exchange rate remaining relatively stable at 3 pesos to the US dollar, in line with the letter of intent to be signed with the IMF.

The agreement with the IMF anticipates a 3% primary budget surplus which should be destined to repay foreign debt commitments and will be provided 2,4% by the federal government and 0,6% by the provincial administrations.

The budget sent to Congress does not contemplate salary increases for government employees and tax revenue is estimated in the equivalent of 27 billion US dollars.

However to achieve that level of revenue reforms to the taxing system are needed, several of which have been under Congressional discussion for the last two months.

The economy is estimated to grow 4% in 2004, less than the 5,5 to 6% expansion projected for this year. Regarding inflation the target is 7,5% because sometime next year public utility rates are expected to be adjusted, once the privatization contracts have been reviewed.

Congressional sources said that "there should be no problem" with the budget, and the bill will be voted sometime late October, early November after the "different committees assess the estimates and draw their own conclusions".

President Kirchner's strong showing in the latest regional and Deputy elections plus the much praised recent agreement with the IMF, where some of the most controversial issues were diluted, have consolidated the ruling party in Congress and prospects for speedy approval of Executive initiatives.