MercoPress. South Atlantic News Agency

Argentine Central Bank boasts having cut run on deposits

Redrado praises his Bank achivements

The Argentine Central Bank president Martin Redrado said that “there's no floor on sight for the international financial markets crisis”, but in recent months “for the first time in decades, Argentina managed to stop a run on the bank's reserves”.

Speaking before the Council of the Americas meeting in Buenos Aires Redrado said that the international financial situation and of the last few months in Argentina "tested" the strength of the country's monetary policy. "The Central Bank efforts crystallized in reassurance policies which allowed reversing the exit of bank deposits from Argentina", which confirms that since the international financial crisis outbreak Argentina is "on the right track" based on a sound, long term monetary policy. "There's still no floor for the international capitals market crisis; the end of the descending spiral is linked to a lesser unbridled consumption mainly in the United States" added Redrado. However the Central Bank official warned that the Latinamerica will not remain immune to the effects of the international situation even when "the region is not in the epicenter of the crisis". "The solid fundamentals of the Central Bank will only be corrected if the international financial crisis worsens", he said pointing out that countries "with hefty budget and current account deficits have been the most exposed". "In Argentina a combination of external and domestic factors triggered a turbulence which the Central Bank was able to prevent with a quick, surgical reply which cut the demand for pesos and strengthened the standing of the US dollar", underlined Redrado. Regarding Argentina's foreign debt Redrado said the debt/GDP ratio "is manageable" and revealed that to maintain that ratio "we need an annual growth of 1.3%", which we have consistently over targeted. Possibly if international commodities prices drop 40%, "we could have problems with the ratio". Redrado pointed out that in 2001 to pay interests Argentina needed 22% of tax revenue "but now the percentage is down to 7%". Argentina has a primary budget surplus of 3.5% of GDP and "we only need 1.8% to keep our debt at the required international ratio". The Central Bank president ended his presentation saying that current Argentine monetary and fiscal policies are geared to "a sustained economic growth with social inclusion".