MercoPress. South Atlantic News Agency

Lavagna describes Kirchner's policies as “interventionist”

Argentina's former Minister of Economy Roberto Lavagna took distance from the current “state oriented” and “market intervention” policies of President Nestor Kirchner's administration

In a Sunday interview with Brazil's prestigious and business oriented daily Folha de Sao Paulo, Mr. Lavagna pointed out that since he left office last November in Argentina there have been economic "policy changes" with a greater participation from government and direct interference in "price fixing" controls. "These are policies which I would not subscribe", he underlined.

"Recently the waterworks were handed over to the union; the government has a minority share in the airports' management and in Aerolineas Argentina, plus a strong increase in subsidies to transport. These are all decisions which imply changes in economic policy regarding a greater involvement of government, which I don't support", he emphasized.

"I'm not in favour of government involvement in activities that can be developed and managed by the private sector. Government must concentrate in basic needs such as education, public health, security and strengthening institutions", added Lavagna.

The former Economy Minister who is considered the architect of Argentina's recovery from the worst financial crisis in over a century and of the successful rescheduling of the country's defaulted massive sovereign debt said that Argentina's "macroeconomic solidity is unparallel since 1907".

When asked about the "miracle" which has seen Argentina expand at 8% annually since 2003, Lavagna said that the next stage is "more and better education, science and technology, public health and frontal action against structural poverty, security and the building of more solid government and private institutions that ensure the continuity and expansion of investment and jobs".

However Lavagna who has been tipped as a possible presidential candidate next year left the question open saying that "I don't want to press the calendar".

Mr. Lavagna said he was in favour of Mercosur but warned that the regional grouping must be alert and avoid having the recently arrived Venezuelan president Hugo Chavez "impose his populist agenda".

"Venezuela is welcome as a member, but we must be careful that the Chavez government does not change the economic, trade and financial agenda for a populist, political and military agenda, such as the proposal for a joint Mercosur army".

Lavagna insisted that in spite of the current difficulties faced by Mercosur, mainly claims from junior members (Uruguay and Paraguay) and the possible misunderstandings among senior members, or even uncertainties generated by Venezuela's membership, the group as such is viable and feasible.

"Mercosur is not only viable, but continues to be a strategic instrument for its member countries".

The former minister also revealed that to overcome the 2001/02 melting of the Argentine economy he had to reject many of the IMF proposals among which he mentioned a "massive compensation to the banking system for losses suffered when the Argentine currency devaluation", following the end of the decade long one to one official parity between the peso and the US dollar.