Argentine Runs 780M Peso Deficit
Buenos Aires, Argentina –– Argentina's economy took another turn for the worse Wednesday, when the government announced it had run a public deficit of 780 million pesos ($319 million) in the first two months of the year.
The government had predicted a target deficit of no more than 3 billion pesos ($1.2 billion) for all of 2002, a figure that would be easily surpassed if the current rate of deficit spending continues.
In a press conference in the Economy Ministry, Treasury Secretary Oscar Lamberto played down the significance of the news.
"This excess is almost normal, because the deficit in the first three months, is always higher," he said, adding, "we are going to fulfill the budget targets."
Lamberto said the deficit was partly the result of one-off costs left from 2001, like the year-end bonus for state workers and the dip in tax revenue during the first quarter, when most Argentines take their holidays.
Government income fell to 1.04 billion pesos from 1.71 billion pesos in February 2001. Spending was 1.72 billion pesos, down from more than 2 billion pesos 12 months earlier.
With spending already down on last year, Lamberto said it would be hard for the government to carry out further budget cuts.
"There is a limit to spending reductions." he said, "This is like the donkey you teach not to eat, in the end it just dies."
Lamberto warned that if Argentina doesn't receive fresh financial aid from international credit agencies, the country will find it hard to keep up its repayments to the International Monetary Fund and others.
Argentina owes around $6 billion to aid agencies this year, with a payment of $1.6 billion due in April.
Last December, Argentina defaulted $141 billion public debt.
The South American nation, the region's second biggest economy, has been in an ever-deepening recession for the last four years. The economy is expected to shrink this year between 5 percent and 10 percent.
The news of the deficit comes as Argentina President Eduardo Duhalde arrives in Monterrey, Mexico for a U.N. conference on aid for poor nations.
Duhalde is set to meet there with leading figures from the International Monetary Fund, the World Bank and the U.S. government and had hoped to persuade them to release up to $25 billion for Argentina.
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