Connect to share and comment

Budget brawling and airline pilots punching

A fiscal debate gets physical in the Upper House. China and Argentina make up over the soy oil saga. The economy reaches record (nominal) growth, although inflation is rising. Plus, the nation watches the rescue of a girl trapped in a well, and the president declares wine the national drink.

arial,helvetica,sans-serif;">  

Money: A record soybean harvest and growing exports to Brazil and China has pushed growth in South America’s second-largest economy to 9 percent this year, according to the central bank. Argentina’s trade surplus widened to $1.07 billion in September, the highest in three months.

 

Argentina is pushing hard to finish negotiations with the Paris Club, an informal association of creditors from Germany, Japan, and the United States, and repay roughly $7.5 billion in defaulted debt, the country's finance secretary announced last week. Money owed to the Paris Club, is one of the last outstanding debts of the 2001-02 economic crisis, when Argentina defaulted on  $100 billion in debt to private creditors.

 

The Argentine government plans to pay its creditors directly from its Federal Reserve, using record surplus in foreign reserves this year. Making payments directly from government coffers to foreign creditors is a controversial move at home that led opposition party members to boycott budget negotiations in Congress.The deal, which could go ahead without intervention from the International Monetary Fund, would help Argentina return to global credit markets and encourage foreign investment.

 

Credit is starting to become available to Argentina, with Argentine bond yields tumbling 2.66 percentage points since June  after President Fernandez  completed a $12.2 billion debt restructuring plan. Still, the Argentine government will not return to the international bond market just yet, said Finance Secretary Hernan Lorenzino. With tax revenues and trade surplus at an all time high, the government prefers to finance itself this year and hold out for better credit yields in the coming year.

 

All the money coming in is making Argentina's peso one of the most attractive "carry-trade" currencies in the world, according to the so-called Sharpe ratio--a gauge that measures investor risk. According to Bloomberg's rank of 35 currencies, the peso posted the biggest drop in risk among emerging economies. 

  

Still Argentina's economic growth is somewhat dampened by the world's third highest inflation rates. The official Consumer Price Index went up 0.8 percent in the last month alone, though private analysts put the increase at 2.4 percent. The rapid increase has sent food and beverage prices skyrocketing and continues to put pressure on Argentine grocery bills. Inflation-savy Argentines became particularly incensed when economy minister, Amado Boudou, said earlier this month that inflation "is only of concern to some members of the upper middle class."  

 

Elsewhere: After neighboring Chile garnered the international spotlight with a successful rescue of 33 miners trapped underground, Argentina had its own underground rescue drama when a three-year-old girl fell down a 100-foot well. Rescue workers spent six hours pulling Vanessa Mamani from the deep shaft in a field in Florencio Varela, in Buenos Aries province. The rescue was broadcast live on Argentine television (of course), with fiber optic cameras showing the little girl trapped at the bottom of the shaft. President Kirchner hailed the rescue a miracle after visiting the tiller in the hospital.

 

President Kirchner is about to also  hail wine Argentina's national drink this week. In a ceremony on Wednesday, Kirchner plans to declare wine Argentina's national drink because " it is an honorable ambassador in the world and represents the pride of the Argentine people" according to Telam. Argentina is the 7th biggest consumer of wine per capita in the world and some have hailed the development of the wine industry in Mendoza, the wine producing region on the country, to be akin to Napa 30 or 40 years ago.  

http://www.globalpost.com/dispatch/news/regions/americas/argentina/110428/budget-brawling-and-airline-pilots-punching