GENERAL AGREEMENT ON

TARIFFS AND TRADE

Committee on Balance-of-Payments Restrictions

RESTRICTED

BOP/287 28 September 1988

Limited Distribution

Original: Spanish

1988 CONSULTATION WITH ARGENTINA UNDER ARTICLE XVIII:12(b)

Statement by Argentina under Simplified Procedures for Consultations

The following is the statement provided by Argentina for the consultation.

Situation and evolution of Argentine economic policy since 1985

In June 1985 the Argentine Government launched the economic programme known as the Austral Plan. It combined conventional demand-side policies with mechanisms to neutralize the undesired effects on distribution resulting from the sharp drop in the inflation rate. The programme also introduced a plan to dissipate the deep-rooted inflationary expectations built up over various decades of experience of high and variable inflation.

The key elements of the plan were a price and wage freeze, a restrictive monetary and fiscal policy and currency reform. A new currency was introduced, the Austral, with a dollar-linked exchange rate.

The immediate result was a drop in inflation from hyper-inflationary levels to about 2 per cent a month for the second half of 1985; an increase in the demand for money which caused the M/GDP ratio to rise from 3.5 per cent to 8.3 per cent in the first quarter of 1986; and a trade surplus in 1985 of 4,600 million dollars. The level of domestic activity also began to recover, and in 1986 GDP grew by 5.4 per cent. The downward trend in investment was also reversed, with a growth of 18 per cent in 1986. Long-term external obligations were rescheduled, and arrears in payments abroad eliminated. Despite this progress, the stabilization achieved proved shaky. As from July 1986, inflationary trends reappeared, bringing the price level (CPI) up to a monthly 8.8 per cent in August.

LBISD 20S/47

88-1 3c

BOP/287 Page 2

Various kinds of imbalance caused this resurgence of inflation. Some of them were present from the beginning of the Austral Plan, such as the food supply problem. The elimination of the inflationary tax increased the purchasing power of incomes, especially for the less-well-off sectors. The growth of demand stimulated the recovery of the level of activity, but also brought pressure to bear on prices, since the food supply did not grow at the same pace. An example of this is meat, whose price increased well above the average because of the imbalance between supply and demand.

The same rigidities were also to be seen in the case of some industrial goods, reflecting the lag in the response by undertakings in their investment decisions. Imbalances of this kind in specific sectors were passed on to the economy as a whole.

In addition to these problems, mention should be made of certain difficulties in the policy of greater price flexibility, introduced in April 1986. The mechanism of administered prices sought to achieve adjustments in prices, wages, charges and the exchange rate which would make it possible to maintain low inflation without recessionary conditions and with sufficient flexibility so as not to hinder the movement of relative prices inherent in a dynamic economy.

In this framework, the rate of inflation came to depend largely on the outcome of wage negotiations. Available data indicate that wage settlements were often higher than those which the wage justification mechanism would have represented, and many unions obtained agreements above the official wage ranges. These wage increases stimulated demand and fuelled inflation.

An additional source of weakness of the Austral Plan was the sharp deterioration in the terms of trade. Following the implementation of the Austral Plan, world cereal prices again dropped sharply and bad weather conditions caused flooding which reduced agricultural output. Meanwhile, investment demand led to an increase in imports, especially of high-priced capital goods. The trade surplus of 1987 shrank considerably.

The budget deficit increased as a result of lower receipts. To make up for the drop in agricultural prices and encourage supply, export taxes were practically eliminated. In addition, some of the extraordinary measures introduced under the Austral Plan were necessarily short-lived. On the expenditure side, there was an increase in the deficits of State-owned enterprises, largely as a result of lags in increases in charges, and large deficits in the provincial finances. The combined effect was an increase in the fiscal deficit, which had a direct impact on inflation and consequently on the level of economic activity.

Since early 1988 the short-term difficulties appear to disguise the progress made in medium-term structural reforms of the Argentine economy. Inflation has once again picked up, the budget deficit has shrunk but more slowly than expected, and economic growth has slowed. Nevertheless, the structural reforms have begun to have an effect. The integration of Argentine industry into world markets has brought a significant increase in

BOP/287 Page 3

exports. Investment has continued the recovery which set in 1986, and in 1987 grew by almost 40 per cent over 1985.

Obviously, these paradoxically conflicting trends cannot co-exist for long. The Argentine Government has therefore undertaken to correct the outstanding problems which could otherwise hinder growth. The correction of the budget deficit through changes in certain relative prices is leading to a temporary increase in inflation and a slowing of economic activity. However, a budget deficit of 2 per cent of GDP in the second half of 1988 is an essential element to bring a sharp drop in the rate of inflation. Maintaining an internationally competitive exchange rate, as well as a larger volume of agricultural supply and the temporary recovery of prices of traditional export products, together with incentives for exports of manufactures, will make it possible to achieve a better result in the trade balance. A trade surplus in the order of 3,000 million dollars is projected for 1988. Besides the implementation of responsible macro-economic policies, the consolidation of the stabilization and growth process requires an easing of the problems connected with international financing. The heavy burden of the external debt and the complex negotiations for fresh funds continue to hinder investment. The external debt not only requires huge transfers from the private sector but also creates uncertainty, discouraging investment and economic growth.

Thus, the Government recently put forward a proposal aimed at achieving a permanent solution to the debt problem. The economic strategy to be pursued in the coming years is set in this framework.

Strategy of the economic reform programme

The measures included in the programme are described in detail below. It is the Government's objective to implement the entire programme before its constitutional mandate expires.

In order to reconstruct the necessary framework for the stability and growth of the Argentine economy, the Government is implementing a vast programme of reforms. The integration of the Argentine economy in the world economy, the modernization of the State and deregulation of markets are the three interdependent components on which this programme is based. Consequently, the programme attaches fundamental importance to fiscal reforms, in order to bring down the deficit to a minimum level compatible with its external financing. This implies improvements in tax collection, cuts in public spending, restructuring of State-owned enterprises and a process of deregulation and privatization. The reforms proposed for the financial system will make it less dependent on State funds and enable it to play its primary rôle of mobilizing savings for investment. The strategy of openness is aimed at expanding the horizons of manufacturing enterprises and freeing them from a system of restrictive regulations and special incentives which undermine the productivity of investment. In exchange, there should be a gain in efficiency based on expansion in world markets.

— ^

BOP/287 Page 4

A. Reform of the public sector

The budget prepared for 1988 provides for a deficit of 3.9 per cent of GDP.

In the national budget for 1988, the Government has focused efforts on five areas which swelled the deficit: central government, relations with the provinces, State enterprises, social security and the quasi-fiscal deficit of the Central Bank.

In January 1988, the National Congress adopted a set of tax measures aimed at reducing the budget deficit. These measures, together with those adopted under the Austral Plan, had the following objectives: (i) increase the yield from the tax on earnings and capital, reducing the incidence of indirect taxes in f.ivour of direct taxes; (ii) improve tax administration to reduce evasion (elimination of banking and stock-exchange secrecy, registered shareholding); (iii) increase internal taxes and stamp taxes which can be collected easily; (iv) introduce obligatory saving and raise the rate of the tax on cheques so as to correct the distortions and unfair aspects of the industrial promotion régime; (v) create internal taxes on liquid and gas fuels, as well as telephone charges, so as to correct the structural financial imbalances in the social security system.

Measures relating to expenditure included: (i) reduction in public investment by postponing some projects, cutting the deficits of State-owned enterprises through increases in their charges, controlling their spending, demonopolization and deregulation of their activities in some cases and conducting studies aimed at selective partial privatization (for example, of Aerolineas Argentines, ENTEL and Ferrocarriles Argentinos); (ii) modification of the "buy domestic" régime for the national administration and State-owned enterprises.

The medium-term programme involves a sustained effort to eliminate the structural deficit over the next three years.

With regard to the civil service, the Government will:

reorganize civil service personnel on the basis of various salary scales and modernization and training programmes, attaching priority to the ranking of management posts;

among services for which the public sector is responsible, identify those which could be carried out more efficiently through outside contracting;

implement a programme to reduce the leave granted to workers so as to reduce absenteeism;

improve transparency by progressively making subsidies explicit (for example, including industrial development and the quasi-fiscal deficit of the Central Bank in the budget process).

<<i

BOP/287 Page 5

With regard to tax administration, the Government will:

continue to improve its policy to cut down on tax evasion;

undertake a study aimed at improving collection of taxes on earnings and value-added, followed by a reduction in tax rates and a broadening of the tax base.

With regard to spending cuts, the Government will:

focus on the following areas: (i) transfer and selective restructuring of enterprises in the area of defence (see Annex 3); (ii) revision of the investment programme in the energy sector (see the section on energy); (iii) new evaluation of the cost efficiency of the nuclear programme and search for private financing and participation in the projects that will be pursued;

restructure the public investment programme so as to reduce spending on investment projects that can be postponed or cancelled without prejudice to the country's economic growth. Subsequently, changes in the composition of public investment should lead to greater economic efficiency, and greater public saving should make it possible to increase aggregate public investment.

With regard to State-owned enterprises:

The Treasury has become responsible for servicing the foreign debt of these enterprises, and from now on will make no further financial contribution to them.

This year the Executive Power ordered a four-per-cent cut in the spending of public enterprises in order to overcome deficits and emergencies.

In 1987 the Government also issued a demonopolization decree, opening up to private investors and competitors areas that had previously been reserved for the State. For example, in the field of telecommunications more than twenty-five projects have been submitted, nine of which have been or are in the process of being approved.

In addition the Government will:

continue the deregulation and demonopolization of telecommunications, petroleum, gas, steel, railways and air transport ;

pursue privatization efforts, with the planned sale of 40 per cent of the shares of Aerolineas Argentinas and ENTEL.

—^

BOP/287 Page 6

sell off assets and continue to offer opportunities for private investment and reorganization of certain areas under the Ministry of Defence;

take action to increase the recovery of costs of services provided directly by the Central Government (for example, postal services and railways);

reduce the cost of purchases of goods and services through greater competition and a review of the rules governing government procurement;

Rationalize undertakings that have structural deficits.

B. Action taken

The Government has taken a large number of measures to strengthen the financial system in 1587-88. These include: (i) liberalization of interest rates (1987); (ii) strict measures on the classification of loan portfolios, reserves for loan losses and accumulation of interest on doubtful loans (1987-88); (iii) guarantee for all small deposits (1987); (iv) reduction of the unremunerated marginal cash reserve requirement to levels of 0 to 3 per cent for fixed-term deposit (1986-87); (v) reduction of subsidies connected with Central Bank rediscounts and improvement of loan management by the Central Bank through the use of budget techniques (1987-88); (vi) improvement in the regulation and supervision of the financial system, including holdings, capital structure and transparency of public information, (vii) liquidation of a number of insolvent financial intermediaries, and in particular sale of one of the major private banks with a network of ninety-six branches (1984-87), and of 152 branches of other banks under liquidation as part of the efforts to stabilize the financial system.

Since most of these measures were taken over the last eighteen months in a context of instability, they have not yet had their full impact on the main problems of the sector. The sharp reduction in the marginal cash reserve requirement once again attracted resources to the institutional banking system, for the equivalent of roughly $a 1,200 million, with an increase of nearly 30 per cent in fixed-term deposits during the month following the adoption of the measure. If they are maintained and combined with proper macro-economic management, these measures will play an important part in medium-term recovery.

Continuity of policies

The Government intends to continue its efforts by adopting the following measures:

presentation to Congress of a draft reform of the statutes of the Central Bank so as to make it more independent and limit its powers to finance the public sector;

BOP/287 Page 7

strengthening of preventive regulations (classification of loan portfolios and provision for loan losses) and of the supervisory rôle of the Central Bank;

presentation to Congress of a proposal for the creation of an entity independent of the Central Bank to be responsible for administering the liquidation of assets owned by bankrupt institutions which are currently under judicial administration;

creation of a programme of deposit insurance, as provided for in the new draft legislation to set up an independent State agency to guarantee deposits up to a specified amount, which would be financed primarily by charges on the institutions and guaranteed by the Central Bank;

creation of ceilings on Central Bank rediscounts, gradually reducing these levels and increasing public information and budget controls. In 1988, the net rediscount flow will be

^ negative;

reorganization of the main public-sector banks (for example BANADE and the provincial banks) through recapitalization, restructuring and the gradual elimination of Central Bank financing ;

reform of the National Mortgage Bank, through the gradual elimination of Central Bank financing and the expansion of its own wholesale banking operations. This would include improvement of the recovery of costs and loan portfolio, together with a new capital structure;

development of capital markets, giving priority to institutional investors (e.g. insurance companies and provident funds), as well as financing through securities and on a longer-term basis.

C. Trade and indistrial policies

% Action taken:

The present Government began a thorough reform of trade policy in 1986 and stepped up its efforts in 1987-88. While the exchange rate was competitive, fiscal requirements under the stabilization plan of 1985 led the Government to establish a tariff surcharge of between 5 and 15 percentage points, which brought tariffs to a range of between 15 and 33 per cent. The strengthening of the exchange rate and the tariff surcharge meant that a number of quantitative import restrictions became superfluous as these price disincentives became more important. In any event, because of price controls the protected producers were often unable to benefit from this protection.

During 1987 the Government: (i) modified the régime of temporary entry for imports, extending it to virtually all products and making it

wmmv

BOP/287 Page 8

automatic; (ii) eliminated export taxes for approximately 800 headings of the export nomenclature; (iii) introduced a general programme compatible with the GATT for the refund of indirect export taxes; (iv) improved the credit risk involved in export financing; (v) reduced the coverage of quantitative import restrictions from 62 per cent to 37 per cent of manufactured products; and (vi) implemented a programme aimed at simplifying export and import procedures.

The Government adopted four other important measures: (i) it transferred the authority of the Directorate General for Military Manufacturing over iron and steel to the Ministry of Industry and Foreign Trade, which subsequently eliminated all the quantitative restrictions on imports of such products, thus increasing the coverage of totally automatic imports by 5.3 percentage points; (ii) it eliminated all reference prices in keeping with the application of the GATT customs valuation code; (iii) it extended the temporary admission régime to indirect exporters by introducing a domestic letter of credit; (iv) it set up an export financing facility at internationally competitive rates; (v) it reduced import tariffs on iron and steel, petrochemicals, agricultural chemicals, pulp and other paper products, and eliminated quantitative restrictions on agricultural machinery and tractors. The liberalization of iron and steel imports, in particular, represents a major step forwards towards greater integration of the Argentine economy in the world economy.

Further measures

In October 1988, the Government intends: (i) to reduce the coverage of quantitative import restrictions to less than 10 per cent of the import tariff nomenclature; (ii) to reduce the average tariff rate to 30 per cent (on a product-weighted basis) and also reduce the dispersion; (iii) bring all tariffs into the 5-40 per cent range; (iv) introduce an anti-dumping mechanism consistent with the GATT and based on considerations of national economic interest; (v) replace non-tariff import barriers by tariffs, using temporary restructuring surcharges or direct budget subsidies to facilitate the transitional adjustment; (vi) continue to reduce taxes on non-agricultural exports; (vii) eliminate tariff exemptions except for those connected with export activities, the temporary admission system and special bilateral agreements.

Other measures will include:

simplification and liberalization of export procedures, in particular those affecting small and medium-sized enterprises;

consolidation of the automatic temporary entry system for exports ;

improvement of the export tax credit system so as to ensure real and automatic exemption from all value-added taxes for exports;

BOP/287 Page 9

gradual elimination of fiscal export subsidies; for example no new PEEX will be authorized and existing ones will not be extended;

development and implementation of a broad international marketing strategy, and improvement of the quality of Government services, especially for small and medium-sized enterprises.

Industrial policy

Measures adopted:

In late 1987 and early 1988, the Government worked together with Congress to adopt a law to unify the system of industrial promotion, eliminating the special provincial and sectoral systems. It would also replace specific tax and duty exemptions by tax credits which could be debited against various tax obligation, thus avoiding serious distortions in allocation. In addition, the Government has adopted the following administrative measures: (i) application of a stricter and more transparent methodology for the classification of projects for which the promotion benefits have been sought, thus increasing the efficiency of investment and halving the fiscal benefits authorized; (ii) improvement of efficiency of tax collection in connection with the exemption programme through the introduction of a system of real guarantees (Resolution 2794/87); (iii) reduction of the fiscal cost and tax evasion through the elimination of the free transferability of tax credits on sales of suppliers to enterprises promoted through exemptions to the value-added tax on sales (Decree 575/88) and elimination of the reimbursement of indirect taxes for mainland suppliers to Tierra del Fuego Island.

Further measures:

The Government will reform the present industrial promotion system through the draft Industrial Promotion Law presented at the end of 1987. In May 1988 it was adopted by the Chamber of Deputies and is currently under consideration in the Senate. It will greatly modify the present promotion system in the following ways:

Elimination of the special sectoral régimes, to be replaced by a sectorally-neutral investment promotion plan for projects which satisfy criteria relating to export promotion, technology intensiveness and/or productivity.

Elimination of the various provincial régimes (save for Tierra del Fuego) and introduction of a unified promotion régime for all provinces, encouraging industrial development according to regional comparative advantages.

Elimination of all tax exemptions and deferrals and trade regulations (such as tariff exemptions, temporary tariff surcharges and quantitative import restrictions) and introduction, as the sole instrument, of tax credit certificates

that can be applied against various tax obligations, thus eliminating: (a) the bias towards capital intensiveness (elimination of general exemptions from the tax on profits and capital gains and the value-added tax and tariffs on capital goods); (b) the bias in favour of low value added on total sales (elimination of exemptions from the value-added tax on purchases of inputs); (c) the anti-exporting bias (elimination of exemptions from the value-added tax on purchases of inputs and sales on the domestic market, transferability of tax credit certificates in the producing stage for exporters only); (d) the bias against the entry of new firms and small and medium-sized firms (transferability of the tax credit certificate in the investment stage); and (e) the bias against domestic capital-goods producers (elimination of tariff exemptions on capital goods, which currently result in negative effective protection).

Making the system transparent and reducing its fiscal cost by: (a) inclusion of the issuance of tax credit certificates in the annual national budget, and subjecting the promotion system to the overall budget restrictions; (b) elimination of the incentive for provincial governments to grant generous tax incentives against national tax receipts, in that the current law allows provincial governments to grant exemptions in relation to shared national tax obligations; the new system will limit these tax costs, by requiring the National Government to issue a limited amount of tax credit certificates for the provinces.

BOP/287 Page 11

TIME-TABLE OF FUTURE ACTIVITIES RELATING TO STRUCTURAL REFORM

Sales and privatization of public enterprises

August 1988

August 1988

August 1988

September 1988

September 1988

September 1988

September 1988

November 1988

June 1989

Trade policy

October 1988

October 1988

October 1988

October 1988

December 1988

Finalization of the contract for the partial privatization of Aerolineas for presentation to the National Congress.

Sale of Atanor S.A.M.

Evaluation of assets of Petroquimica Rio Tercero S.A.

Presentation to Congress of the contract for the partial privatization of Aerolineas Argentinas.

Start of negotiations for the sale of Induclor S.M., Petropol S.M. and Monômeros Vinilicos S.A.M.

Transfer to the private sector of the project for a new gas processing plant (separating plant).

Finalization and presentation to Congress of the contract for the partial privatization of ENTEL.

Deadline for the submission of proposals for the purchase of Forja Argentina S.A., Polisur S.M. and Carboquimica Argentina S.M.

Privatization of the administration of grain elevators through long-term lease to the private sector and redefinition of the National Grains Board.

Reduction of the coverage of quantitative import restrictions to less than 10 per cent of the import tariff nomenclature.

Reduction of the average tariff rate to 30 per cent (on a product-weighted basis) and reduction in tariff dispersion.

Setting of a range of 5-40 per cent for all tariffs.

Introduction of an anti-dumping mechanism compatible with the GATT based on considerations of national economic interest.

Presentation to Congress of draft legislation to regulate the fishery sector, including international co-operation for its development.

BOP/287 Page 12

Deregulation of the petroleum sector

September 1988

November 1988

Completion of first invitation to bid in connection with PETROPLAN.

Fourth invitation to bid in connection with the Houston Plan.

Measures to increase the efficiency of the public sector

September 1988

October 1988

October 1988

Start of implementation of a programme to reduce the leave granted to public-sector employees in order to reduce absenteeism.

Identification of services currently in the public sector which could be sub-contracted more efficiently outside the sector, beginning with the Ministries of Health and the Economy.

Restructuring of Yacimientos Carboniferos Fiscales inter alia by suppressing the Buenos Aires office.

Reorganization of the Central Bank and public sector banks

September 1988

September 1988

December 1988

December 1988

December 1988

Presentation to Congress of draft legislation for the creation of an agency independent of the Central Bank to administer the liquidation of assets owned by bankrupt institutions currently under judicial administration.

Presentation to Congress of new draft legislation to create an independent State entity to guarantee deposits up to a specified amount.

Reorganization of the main public sector banks through recapitalization, restructuring and the continuing gradual elimination of Central Bank financing.

Reform of the National Mortgage Bank through the continuing gradual elimination of Central Bank financing and expansion of its wholesale operations.

Presentation to Congress of draft legislation for the reform of the Statutes of the Central Bank in order to make it more independent and limit its powers to finance the public sector.

'VI

1

BOP/287 Page 13

CENTRAL BANK

External Debt by Creditor (End of Period)"

(US$ Million)

31.12.83 31.12.84" 31.12.85 31.12.86"

PUBLIC SECTOR

Bilateral institutions (direct)

Multilateral institutions

IMF

Securities

Debt refinanceable with exchange

insurance

. Banks

. Other creditors Banks Other creditors

Paris Club 1982/85

Paris Club 1986 onwards

PRIVATE SECTOR

Bilateral institutions (direct)

Multilateral institutions

External debt with exchange

insurance

. Banks

. Other creditors

Banks

Other creditors

Paris Club 1986 onwards

TOTAL

Bilateral institutions (direct)

Paris Club 1982/85

Paris Club 1986 onwards Multilateral institutions

IMF

Securities

Bank 8

Other creditors

31,709

1,223

1,466

1,173

4,208

1,447 1,361

86 19,788 2,404

-

-

13,360

119

254

6,855

6,342

513

4,376

1,756

-

45,069

1,342 --

1,720 1,173

4,208

31,867

4,759

35,527

1,861

1,421

1,140

4,307

3,740

3,485 255

21,000 2,058

-

-

10,644

157

257

4,095

3,655

440

4,600

1,535

-

46,171

2,018 --

1,678 1,140

4,307

32,740

4,288

40,868

778

2,013

2,289

3,922

5,191

4,829

362 22,633 1,981

2,061

-

8,458

122

267

2,561

2,278

283

4,037 1,471

-

49,326

900

2,061 -

2,280

2,289

3,922 33,777

4,097

44,722

526 2,657

2,719

3,638

5,880

5,476

404 24,213

795

2,294

2,000

6,700

68

229

1,215

1,057

158

2,949

1,995

244

51,422

594 2,294

2,244

2,886 2,719

3,638

33,695

3,352

Estimated according to external debt statistics 2 Obligations in currencies other than the dollar are valued at the exchange

rate in force on 31.12.83. 3 Obligations in currencies other than the dollar are valued at the exchange

rate in force on 31.12.84. 4 Obligations in currencies other than the dollar are valued at the exchange

rate in force on 31.12.85.

Obligations in currencies other than the dollar are valued at the exchange

rate in force on 31.12.86.

Excluding bonds and promissory notes, which are included elsewhere

NET INTERNATIONAL RESERVES (US$ Million)

IB O

CD — t o

t - i 00

ASSETS

- Gold - Foreign exchange - LAIA (net) - Investments realizable in

foreign exchange - Reserve position in IMF - Special drawing rights

LIABILITIES

- IMF - Swap transactions - Arrears - Bonex 1975-1977, 1982 and 1984 - Bank loans - Government loans - Paris club - Other

VALUATION AND OTHER ADJUSTMENTS

NET INTERNATIONAL RESERVES

1980

6,743

1851

514 -161

5,541 339 325

100

--94 -

6

81

6,724

1981

3,222

1851

365 -224

2,219 276 401

502

484 -15 -

3

445

3,165

1982

2,507

1851

247 -184

2,159 100 -

6,058

1,380 2,540 1,598

-

540

550

-3,001

1983

2,671

1.4212

271 s 5

901 -23

9,054

1,173 1,228 3,222 2,090 1,250

91

810

-5,573

1984

2,568

1.4212

250 -122

993 -26

10,840

1,139 937

4,163 2,476 1,850

275

955

-7,317

1985

4,801

1.4212

445 9 4

2,828 -1 3

13,386

2,289 730

1,718 2,258 3,596

1,617 1,178

712

-7,8 73

1986

4,287

1.4212

347 143

2,370 -6

14,857

2,719 639 544

2,126 5,059

2,514 1,256

622

-9,948

Mar/1987

4,153

1.4212

114 93

2,476 -49

15,551

2,727 572 328

2,225 5,739

2,582 1,378

989

-10,409

Valued at US$42.22 per troy ounce

"Valued at US$325.00 per troy ounce

# 0

ESTIMATE OF BALANCE OF PAYMENTS (US$ Million)

ITEM 1980 1981 1982 1983 1984 1985 1986 1987

CURRENT ACCOUNT

GOODS Exports f.o.b. Imports c.i.f.

REAL SERVICES

FINANCIAL SERVICES

UNILATERAL TRANSFERS

CAPITAL ACCOUNT

DIRECT INVESTMENT

COMMERCIAL FINANCING

OTHER

CHANGE IN NET INTERNATIONAL RESERVES

-4,768

-2,519 8,021

10,540

-740

-1,532

23

2,275

788

-115

1,602

-4,714

-287 9,143

-9,430

-705

-3,700

-22

1,155

927

-3,386

3,614

-2,358

2,287 7,624

-5,337

43

-4,719

31

-3,808

257

-2,720

-1,345

-2,461

3,331 7,836

-4,505

-400

-5,408

16

-111

183

-411

117

-2,391

3,523 8,107 -4,584

-205

-5,712

3

647

269

500

-122

•953 -2,859

4,582 8,396 3,814

-231

5,304

-

397

919

-812

290

2,128 6,852

-4,724

-573

-4,416

2

784

574

-540

750

-4,285

6 -5

-4

556 ,356 ,800

-348

,485

-8

185

-19

-584

788

-2,493 -3,559 -J JLôô1 -2.5721 -1,744 -556" -2,075 -4,100'

» o OQ TJ CD —-

M t-> OO Un -J

'Including adjustments for operations not corresponding to the period

SOURCE

m o

IMPORTS BY ARGENTINA H g (US$ *000) <*

1984 1985 1986 1987*

Total value 2 Total value Z Total value Z Total value Z

Member countries of GATT exclusively 2,834,354 61.82 2,410,354 63.20 2,989,186 63.27 3,865,052 66.42

Member countries of GATT and LAIA 1,107,148 24.15 822,674 21.57 1,061,235 22.46 1,161,915 19.97

Sub-total GATT contracting parties 3,941,502 85.97 3,233,028 84.76 4,050,412 85.74 5,026,967 86.39

Member countries of LAIA exclusively 534,288 11.65 475,927 12.48 535,659 11.34 562,548 9.67

Sub-total LAIA member countries 1,641,436 35.80 1,298,601 34.05 1,596,894 33.80 1,724,463 29.64

Third countries (not members of GATT nor LAIA) 108,882 2.37 105,193 2.76 138,054 2.92 229,281 3.94

TOTAL 4,584,672 100.00 3,814,148 100.00 4,724,134 100.00 5,818,796 100.00

*Provisional

# #

DESTINATION

Member countries of GATT exclusively

Member countries of GATT and LAIA

Sub-total GATT contracting parties

Member countries of LAIA exclusively

Sub-total LAIA member countries

Third countries (not members of GATT nor LAIA)

TOTAL

EXPORTS B (US$

1985

Total value %

4,806,738 57.25

1,001,079 11.92

5,807,817 69.17

484,368 5.77

1,485,447 17.69

2,104,106 25.06

8,396,291 100.00

ARGENTINA •000)

1986

Total value 2

4,274,954 62.39

1,214,263 17.72

5,489,217 80.11

342,246 4.99

1,556,509 22.72

1,020,732 14.90

6,852,195 100.00

1987

Total value Z

3,740,349 58.81

1,053,919 16.57

4,794,268 75.38

260,010 4.09

1,313,929 20.66

1,305,882 20.53

6,300,160 100.00

BOP/287 Page 18

MOVEMENT OF WHOLESALE AND CONSUMER PRICES

Month Wholesale prices

Monthly rate Cumulative Consumer prices

Monthly rate Cumulative

1985 363.9 385.4

1986

January February March April May June July August September October November December

0.8 2.2 5.2 8.1 13.0 18.1 29.9 38.8 46.1 53.3 57.9

3 . 0 1 .7 4 . 6 4 . 7 4 . 0 4 . 5 6 . 8 8 . 8 7 . 2 6 . 1 5 . 3 4 . 7

3 . 0 4 . 8 9 . 6

1 4 . 8 19 .4 2 4 . 9 3 3 . 3 4 5 . 0 5 5 . 5 6 4 . 9 7 3 . 7 8 1 . 9

1987

January February March April May June July August September October November December

5 . 3 6 . 9 7 . 9 1 .9 4 . 9 6 . 7 9 . 4

14 .6 16 .6 30 .5

4 . 3 2 . 3

5 . 3 12 .6 21 .4 2 3 . 8 2 9 . 8 38 .5 51 .5 73 .6

102 .5 164 .2 175 .6 181 .8

7 . 6 6 . 5 8 . 2 3 . 4 4 . 2 8 . 0

1 0 . 1 1 3 . 7 1 1 . 7 1 9 . 5 1 0 . 3

3 . 4

7 . 6 1 4 . 5 2 3 . 9 2 8 . 1 3 3 . 5 4 4 . 1 5 8 . 7 8 0 . 5

101 .6 141 .0 1 6 5 . 7 1 7 4 . 8

1988

January February March Aprjl May t June* July

1 2 . 1 13 .4 1 6 . 3 1 6 . 8 2 3 . 3 24 .0 2 5 . 0

1 2 . 1 2 7 . 1 4 7 . 7 72 .6

112 .7 163 .9 229 .9

9 . 1 10 .4 1 6 . 3 1 6 . 8 2 3 . 3 2 2 . 3 2 5 . 6

9 . 1 2 0 . 5 3 8 . 2 62 .0 8 7 . 5

1 2 1 . 2 177 .9

* Provisional

RATE OF EXCHANGE

BOP/287 Page 19

Month Official ($a/US$) Parallel

1986

January 0.8010 0.9010 February 0.8010 0.8620 March 0.8010 0.9100 April 0.8278 0.9220 May 0.8496 0.9000 June 0.8736 0.8950 July 0.9037 0.9140 August 0.9650 1.0880 September 1.0504 1.2250 October 1.0936 1.2040 November 1.1510 1.3500 December 1.2129 1.5610

1987

January 1.2928 February 1.3832 March 1.5410 April 1.5410 May 1.5909 June 1.7064 July 1.8934 August 2.1152 September 2.4573 October 3.2433 November 3.5100 December 3.5225

1988

January 3.8920 5.4540 February 4.3340 5.7795 March 4.9200 6.3300 April 5.7220 6.9300 May 6.7400 8.2200 June 8.0700 10.2400 July 9.6500 12.1700

Monthly average - selling 2 From this date, official commercial rate

1 1 1 2 2 2 2 2 3 3 4 4

7132 7122 8799 0400 0700 0900 3800 9300 4500 9500 0600 7700

BOP/287 Page 20

PUBLIC SECTOR

Financing needs (as a percentage of GDP)

19851 1986 1987

YEAR 3.5 2.7 6.3

3 First quarter 7.3 2.3 3.8

3 Second quarter 6.9 0.9 6.5

1 3 Third quarter 1.0 0.8 4.4

2 3 Fourth quarter 1.4 5.7 8.5

Executed budget 2 Executed budget; preliminary figures 3„ -, • • Preliminary

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