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Weekly Report - 28 October 2003

Tracking trends...

ARGENTINA | Tussle with utilities escalates. The Argentine government is taking to court three foreign-controlled power utilities — Edenor, Edesur and Edelap — to collect fines totalling US$2.6m for deficiencies in the provision of services over the past two years. It has also announced that it is fining the water company Aguas Argentina US$469,000 for recent interruptions in the supply. Officials made it clear they believed recent cuts in the power and water supply were intended to press the authorities to grant an adjustment of utility rates, which have been frozen since the peso was devalued in January 2001. Prime minister Alberto Fernández accused the utilities of seeking `risk-free business' and challenged them to `step aside' if they could not guarantee the proper provision of services.

BRAZIL | `Upturn towards year-end'. Finance minister Antônio Palocci last week predicted an upturn in economic growth in November-December, and `even more successful' performance in 2004. He also said that he will be seeking a new, US$10bn agreement with the IMF, but only as `a sort of insurance' in case of upsets in the world financial markets. `We don't want to use that money because it is expensive,' he said. `We shall have it simply as a guarantee.'

CHILE | Consumer credit surges upwards. In what has been welcomed as a sign of reactivation of Chile's domestic market, consumer credit has increased in January-September by 10.6% year-on-year, with the last month recording a 14.5% increase — the biggest of its kind in almost six years. Banks are now confident that they will reach their target expansion of 12% for the year as a whole, since one of the peak borrowing months, December, still lies ahead. The number of borrowers has risen to 2m, about the same as prior to the economic crisis. This said, the evolution of lending to companies over the past year shows up flat as far as local credit is concerned and 19% down as regards borrowing from abroad.

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