MercoPress. South Atlantic News Agency

Lavagna ratifies “weak peso” policy to promote exports

Keeping the value of the peso relatively weak is essential if Argentina's exports are to continue growing, said Argentine Economy Minister Roberto Lavagna speaking at an event organized by the Argentine Exporters Chamber to celebrate Exports Day.

"Conditions referring to exchange rates and the idea of a US dollar worth between 2.20 and 2.40 pesos have nothing to do with this economic model and is an unacceptable condition."

The retort was in reply to criticism that has arisen over the government's policy of keeping the value of the peso as low as possible. Financial sectors, conservative economists and the International Monetary Fund say that the government exchange policy is inflationary and that the peso should be allowed to float freely.

Lavagna added that if exports "grow at 10 to 12% a year over the next five years, Argentina will increase its sales abroad from 16.8 to 60 or 62 billion dollars."

At the moment, Lavagna added, something unique is taking place: "Argentina is growing at seven percent and posting a hefty trade surplus, something that has not occurred in the last 45 years."

"We need an exchange rate that guarantees the competitiveness of our exports and the growth of local jobs," he warned.

"Since 1987 ? Lavagna said ? Argentine exports have averaged some US27 billion a year, but in the last 12 months they have climbed to US36.8 billion, with an increase in volumes exported."

Mr. Lavagna also highlighted that given the current overall foreign debt situation, the debt/export ratio has dropped from 5,5 in 2001 to 3,5 following the restructuring and "should drop to a 2 ratio by 2010.

Enrique Mantilla, the head of the Exporters' Chamber, in turn pointed out that Argentina's exports have jumped 16 percent in the last 12 months.

According to Mantilla "there is a potential for Argentine exports to grow so that by 2010 sales abroad should total US70 billion."