MercoPress. South Atlantic News Agency

Counter cyclical Fiscal Fund proposed.

One of Buenos Aires most respected private financial consulting organizations is recommending given the strong fiscal situation of Argentina, the creation of a Counter cyclical fiscal fund to help restructure debt and invest in social development.

Fundación Capital, FC, estimates that "Argentina is advancing in the consolidation of its fiscal situation with a primary surplus of 12,500 million pesos in 2004 equivalent to 4% of GDP, 2,9% the federal government and 1,1% provincial governments".

Furthermore FC forecasts the Argentine economy will expand 7% with an inflation of 7%, meaning that in 2005 the "consolidated fiscal surplus" could reach 4,4% and 4,9% in 2006.

The counter cyclical fiscal fund according to FC should be invested in recovering outstanding debt and in social areas such as combating poverty, promoting education and health, particularly in those periods when the economy is in the downturn.

In the first two months of 2004, the Argentine primary surplus reached 2,585 million pesos, 1,500 million pesos above the agreed target with the IMF and estimates indicate that for the first quarter the above target primary surplus will be 2,000 million pesos..

However FC also indicates that in the last thirty years the Argentine economy has never managed more than four years running of expansion and "we're now in the second year" and in a "very favourable international context".