Weekly Report - 6 April 2004

ARGENTINA | Signs of reactivation. An eloquent indicator of economic reactivation is the level of federal tax receipts. In March they reached Arg$6.6bn (US$2.3bn), or 37.1% more than in the same month of 2003 (and 44% more than in February). The total for the first quarter of the year is up 33.5% on 2003. Driving the increase was a 53.6% year-on-year rise in receipts of value-added tax (IVA).

Not all of the increase reflects a higher level of economic activity. The tax authorities claim that last year they managed to reduce evasion and payment arrears by Arg$2.75bn (US$958m).

Another sign of a more buoyant domestic market was the 74% y-o-y increase in imports in February. Though this far outstripped the 12% increase in export earnings, the balance still showed a surplus of just over US$1bn. The government has been projecting a trade surplus of US$16.8bn for the year as a whole.

ARGENTINA | Debt piling up. Argentina's public debt at end-2003 reached US$178.8bn, or 138% of GDP — 16.8% more than at the end of 2002. Repayment of about half the debt has been in default since then, but interest has been accruing on that portion. Another part of the increase can be explained by the movements of other currencies vis-í -vis the US dollar, and of the latter vis-í -vis the peso.

URUGUAY | Growth outlook. Though the Uruguayan government's official forecast of economic growth for this year is 5% (`as a minimum'), last week economy minister Isaac Alfie made a point of telling all who would listen at the IDB's annual assembly in Lima that private analysts were considering rates of 8% to 9% as feasible.