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Weekly Report - 18 September 2008 (ISSN 1741-7422)

ARGENTINA: Budget sends confusing signals

The most eye-catching aspect of the 2009 budget sent to congress this week was the decision to cut energy subsidies by Arg$3bn (US$955m), a sign of the government's commitment to strengthen the fiscal surplus, service its debt and keep its promise to repay the US$6.7bn owed to the Paris Club. The austere budget is unlikely to have won over investors. Fernández followed up the budget presentation by issuing her first “decree of necessity and urgency" (DNU) - beloved of her husband and predecessor, Néstor Kirchner, who used it to bypass congress - to increase the size of this year's budget by Arg$36.73bn (US$11.58bn), primarily to cover subsidies and pensions.

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