MercoPress. South Atlantic News Agency

Argentina's reserves at record level; unemployment 9.8%

Argentina holds 40 billion US dollars in reserves said Minister Miceli

Argentina's international reserves reached this week a record 40 billion US dollars according to the latest release from the Central Bank underlining that the strong position “effectively helps to reduce financial vulnerability, grants certitude to investors and reduces the country risk”.

The bank's international reserves are at the heart of a controversy since the President Kirchner administration has anticipated its intention of investing part of the assets in much needed infrastructure projects, and for which it is pressing Congress for changes in the bank's rules. Economy minister Felisa Miceli addressing Monday a financial forum said Argentina now holds 40 billion US dollars in reserves "after having repaid the IMF a year and four months ago, 10 billion US dollars". Argentina is undergoing a massive influx of US dollars spurred by strong international prices for the country's export commodities, tourism and the issuing of sovereign bonds. Reserves rapidly recovered after they dropped to 18.6 billion in January 2006, following the 10 billion payments to the IMF. But by the end of the year they had almost doubled and in April stood at 38 billion and 18 days later 39 billion. Following on that they again soared to 40 billion in only 13 days, according to the bank's release. Last April 12, the Central Bank reserves established a new record, 37.4 billion US dollars, leaving behind the 37.38 billion of January 2001 at the beginning of the financial and banking crisis that led to the melting of the Argentine economy. However at the time most reserves were support loans from the IMF and other multilateral institutions as well as from friendly countries, all of which finally could not impede the collapse. By July 2002, reserves had dwindled to less than 9 billion US dollars. Estimates are that reserves will increase to 45 billion US dollars by the end of 2007 and 54 billion in 2008. In related news the government reported Tuesday that Argentina's unemployment remained below double-digits in the first quarter, falling to 9.8% from 11.4% in the same period a year ago. The Economy Ministry said the measure of Argentines out of work rises to 11.1% in the first quarter if those who receive government welfare are counted as unemployed. In the fourth quarter of 2006, Argentina's jobless rate fell to 8.7% compared with the same period in 2005 -- its lowest level since October 1992. In a report, the Buenos Aires-based consultancy group Economia & Regiones said joblessness rose 1.1 percentage points from the fourth-quarter compared to the first three months of the year, but the increase was expected because of seasonal reasons. "Looking at industry, many sectors close plants during the summer months and as a result, work demand falls. Something similar happens in construction, one of the biggest sectors to generate jobs in recent years, where activity also falls in the summer months," the group said. Unemployment in Argentina peaked to 21.5% in the midst of the 2001/02 financial crisis. But four years of annual sustained economic growth above 8% have helped to create jobs and expand the employment market. Under unemployment, people who work less than 35 hours a week when they would rather work more also dropped to 9.3% in the first quarter from 11% last year, the ministry said, the first time it has dropped to less than 10% since 2001.