Cablegate: Argentina Economic and Financial Review, February

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RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
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RUEATRS/DEPT OF TREASURY WASHINGTON DC
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UNCLAS SECTION 01 OF 02 BUENOS AIRES 000254

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EFIN ECON EINV ETRD ELAB EAIR AR
SUBJECT: Argentina Economic and Financial Review, February
20-February 26, 2010

1. (U) Provided below is Embassy Buenos Aires' Economic and
Financial Review covering the period February 20-February 26, 2010.
The unclassified email version of this report includes tables and
charts tracking Argentine economic developments. Contact Econ
Deputy Jason Witow at WitowJN@state.gov to be included on the email
distribution list. This document is sensitive but unclassified.
It should not be disseminated outside of USG channels or in any
public forum without the written concurrence of the originator. It
should not be posted on the internet.

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Rumors Regarding Departure of Minister of Economy Boudou

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2. (SBU) The press this week reported rumors that Minister of
Economy Amado Boudou would be relieved of his position. Government
spokespeople denied the rumors, saying that the Minister is on the
job as usual. The apparent source of the speculation was an
unsourced article in Clarin, which claimed that Boudou had clashed
with Domestic Commerce Secretary Guillermo Moreno. Many analysts
doubt the veracity of the rumor, given Boudou's importance to the
success of the GoA's proposed debt restructuring. On February 24,
Chief of Cabinet Anibal Fernandez denied the rumor, and gave Boudou
a strong vote of confidence. He also claimed that the rumors were
begun by "certain private analysts, seeking to unsettle the
markets."

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Court denies use of reserves for the Bicentennial Fund

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3. (SBU) On February 24, the Court of Appeals upheld a previous
injunction suspending the GoA decree allocating USD 6.6 billion of
Central Bank reserves for the so-called Bicentennial Fund, to be
used to pay GoA debt servicing coming due in 2010. The earlier
preemptive injunction blocked the transfer of reserves until
Congress could debate and vote on this issue, and the current
ruling upholds this decision. The case will now be brought before
the Supreme Court, which may, however, decline to rule on the
matter, and leave it to be resolved by the Congress.

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Transfer of 2009 BCRA profits to Treasury

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4. (SBU) According to La Nacion (February 24), the GoA has
requested that the Central Bank begin the transfer of its 2009
profits of ARP 24 billion to the Treasury. The process is slated
to begin with the transfer of ARP 1.5 billion in March. This move
will require BCRA Board approval, which is likely, since the
majority of the Board is aligned with the Kirchner administration.

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Trade Surplus up 25% y-o-y in January

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5. (SBU) According to the National Institute of Statistics and
Census (INDEC), exports increased 19% y-o-y in January to USD 4.4
billion. Imports increased 16% y-o-y to USD 3.2 billion, giving a
trade surplus for the month of USD 1.2 billion. The trade surplus
was up 25% y-o-y versus January 2009, which was a weak month due to
the international financial crisis. Compared to January 2008, when
the surplus totaled USD 1.164 billion, there was relatively little
change.

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Textile imports decreased 28% in 2009

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6. (SBU) According to the Sectoral Economic Investigations
consulting company (IES), textile imports decreased 28% in 2009 to
US$ 1.2 billion. IES explained that the decrease is due to the
contraction of the domestic market and protectionist measures
adopted by the GoA. In an attempt to combat accelerating
inflation, Domestic Commerce Secretary Guillermo Moreno promised
that the GoA would subsidize national clothing industries that do
not raise their prices. Inflation reached 7.7% in 2009 according
to the GoA, and about 20% according to private sources.

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Unemployment Rate Dropped to 8.4% In The Fourth Quarter of 2009

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7. (SBU) According to INDEC, the unemployment rate decreased to
8.4% in the fourth quarter of 2009 compared to 9.1% in the previous
quarter. However, the rate was 1.1% higher compared to the fourth
quarter of 2008. INDEC reported that 1.37 million persons are
unsuccessfully searching for jobs. Another 1.68 million
individuals work less than 35h/week and would like to work more.
MARTINEZ

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