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To: elmatador who wrote (34006)	5/20/2003 12:53:03 AM
From: TobagoJack	Read Replies (1) \| Respond to of 74559

Hi Elmat, <<Gold hits three-month high>> Forget gold for the moment, for it will go where it must go. In the meantime, get ready to receive dividend from wealth looted from the int'l and domestic banks ... quote.bloomberg.com Argentina to Unveil 8 Billion-Peso Spending Plan (Update5) Buenos Aires, May 19 (Bloomberg) -- Argentina this week will unveil an 8 billion-peso ($2.8 billion) spending plan to build roads and homes in 2003, counting on surplus funds the country has accumulated in part by not paying its debts, Vice President-Elect Daniel Scioli said. The plan will be financed by a budget surplus created since the government defaulted on debts in late 2001 and deferred loan payments to the International Monetary Fund. Argentina also plans to use World Bank funds for the program, Scioli said. The new spending is part of a campaign promise made by President-elect Nestor Kirchner to create jobs, lower the 18 percent unemployment rate and pull the economy out of a four-year recession. Investors such as WestLB Asset Management Ltd.'s Nick Field are concerned Kirchner will trigger inflation and diminish Argentina's ability to pay bondholders and regain access to capital markets by spending beyond the government's means. ``Kirchner will spend what he has,'' Scioli, a 46-year-old former world speedboat racing champion, said in an interview at his home in the Balvanera neighborhood of Buenos Aires. ``He will not spend what he doesn't have. He is realistic.'' Scioli and Kirchner will be inaugurated this weekend after former President Carlos Menem withdrew from the presidential race last week, citing ``cheating'' by his opponents in the campaign. Polls showed Kirchner would have won about 70 percent of the vote. Economic Growth Kirchner is taking office at a time when Argentina's economy is showing signs of growth as a devalued peso spurs demand for domestically made products. The country's economy probably expanded 5.2 percent in the first quarter from the same period last year, according to preliminary government statistics. That has helped increase tax revenue. In the first quarter the government had a budget surplus of 1.75 billion pesos. An IMF accord calls for Argentina to post a primary budget surplus, which excludes debt payments, equal to 2.5 percent of GDP this year, or about 7.5 billion pesos. Should the government have enough surplus funds, it will spend 8 billion pesos on roads and homes every year, Scioli said. ``What Kirchner is really saying is that he prefers to spend excess resources on social programs rather than debt,'' said Christian Stracke, an economist with New York-based economic research company CreditSights Inc. ``The way to get there should be by restructuring banks. A bank is a way to multiply money invested, when the government takes the role of being the driver of construction, the money gets spent and then it's done.'' Balancing Demands Scioli, who lost his right arm in a powerboat accident during a race in 1989, said Kirchner will balance the need to revive domestic production and spur economic growth with the demands of creditors and lenders. ``We need to be able to have income to pay our debts,'' he said. ``We have to find a balance between our creditors and our capacity to pay. We want to turn back to make Argentina a reliable country.'' Even before taking office, Argentina's next leaders are outlining their plans to boost spending and weaken the peso. The currency has dropped 5.9 percent since Menem pulled out of the race on May 14. Kirchner has said he wants the peso to trade at 3 per dollar to help bolster exports and bring in more dollar revenue from taxes on the sale of goods overseas. The peso fell for a fourth day, dropping 1.8 percent to 2.9430 per dollar at 4:36 p.m. in New York. Banks In addition to financing new roads and homes, the government will push for providing about 20 billion pesos to compensate banks that became insolvent after the government defaulted on $95 billion of debt in late 2001 and devalued the currency. That also would be financed from the budget surplus and increased tax revenue from fighting evasion, said Scioli. ``The priority is to reestablish the financial system in order to finance exports and the credit that companies need,'' he said. A former deputy, Scioli served in the legislature since 1997, when Menem was president and the country was in the midst of a 10- year borrowing spree to finance growing budget deficits that led Argentina to sell $89 billion of bonds on overseas markets, more than any other developing country. Scioli said the next government will be committed to not running a deficit. By spending money to boost domestic industry, Argentina will be in a better position to pay its debts, he said. Inflation Kirchner's priorities may lead to a rise in consumer prices and unwillingness by companies to increase investment in the country, said Field, who manages $400 million of emerging-market debt, including some Argentine bonds, at WestLB in London. ``If at some stage you want to normalize your relationships with the rest of the financial world, you'll need to start to thinking about that, and clearly at the moment they are not too bothered,'' he said. The next government expects the IMF to be more flexible in its demands for a new loan agreement to ensure Argentina has money to pay its debts, Scioli said. He also said Kirchner will seek to smooth differences with electric utilities. ``We have to have good service for consumers at reasonable prices, that let the consumers pay them and the company continue with their investment plans,'' Scioli said. Last Updated: May 19, 2003 16:43 EDT