(COMTEX)  Argentine Economy to Shrink by 1.4 Percent
 
BUENOS AIRES, Aug 31, 2001 (Xinhua via COMTEX) -- Argentina revised its 2001
economic growth forecast downward on Friday but government officials said if all
pledged multilateral aid is received the cash-strapped nation could avoid
raising debt on the market until October 2002.
 
Economy Ministry officials told investors an a conference earlier Friday that
the Number Three Latin American economy after Brazil and Mexico, would shrink by
1.4 percent this year, in contrast with its original 2.5 percent growth target.
 
The government of President Fernando de la Rua, however, predicted the economy
would grow 3.5 percent in 2002, but left investors waiting for fresh details of
conditions on the release of eight billion dollars in new aid announced last
week by the International Monetary Fund (IMF), on top of 39.7 billion in
multilateral aid set in December 2000.
 
Economy Ministry officials also told investors that Argentina would spend 2.6
billion dollars less in 2001 than prior projections, but post a 2002 budget
deficit of nearly 2.3 billion dollars if measured by IMF accounting rules.
 
Data released by the ministry show that the South American country's gross
federal debt totaled 127 billion dollars by the end of March 2001, down slightly
from the 2000 year-end tally of 128 billion dollars, but still a massive burden
to finance for a shrinking economy that produces 280 billion in goods and
services annually.
 
Some analysts have warned the government will find it increasingly difficult to
impose the belt-tightening measures, which include 13 percent cuts in salaries
and pension payments, in a country already hit by three consecutive years of
recession.
 
Public employees, students and jobless Argentinians have staged a series of
protests against policies that aim at achieving a zero budget deficit.
 
Other analysts warned that the austerity policy may end up being
counter-productive as it prevents an increase in domestic consumption that is
seen as crucial in promoting economic growth.
 
Official poverty figures published on Friday give an idea of the difficulties
the government will face in slashing social spending.
 
For instance, the figures show that 3.9 million in greater Buenos Aires -- one
in every three residents in that zone -- live below the poverty line, including
1.2 million who live in absolute poverty.
 
 
 
 Copyright 2001 XINHUA NEWS AGENCY
 
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