ARGENTINA | Investment slump appears to have touched bottom. Industry & commerce secretary Alberto Dumont announced last week that the inflow of foreign direct investment (FDI) has not only stopped falling but has `recovered' this year. He did not back up the claim with figures, but noted that the auto industry continues to invest, and that increased exports of software and pharmaceutical products indicate that there are `alternative investment niches' available. The inflow this year, he says, `will not be as grandiose as in the 1990s, but will be more productive because it will go to processes that employ more people.' A private estimate puts the FDI inflow in the first half of this year at US$800m. In the whole of last year it totalled only US$1bn - down from US$3bn in 2001, US$11bn in 2000 and US$24bn in 1999.
PARAGUAY | Push to reverse the fiscal deficit. Finance minister Dionisio Borda has submitted to congress a budget designed to achieve a primary surplus of 1.4% of GDP in 2004 - after bringing the deficit down from 2.2% to 1% this year. The basic assumption is that GDP will grow by 2% and inflation will be held down to 10%. Borda plans to increase the tax burden from 8.7% of GDP (one of the lowest in the region) to 10.1%; he expects this, plus a crackdown on tax evasion and smuggling, to raise revenues by 25% to 30%. He also plans a `phased' 30% cut in the public-sector payroll.
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