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Cablegate: Argentina Economic and Financial Review, September 14-17,

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DE RUEHBU #1047 2641029
ZNR UUUUU ZZH
P 211029Z SEP 09
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC PRIORITY 4368
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS PRIORITY
RUEHSO/AMCONSUL SAO PAULO PRIORITY 3961
RUEAIIA/CIA WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHINGTON DC PRIORITY

UNCLAS BUENOS AIRES 001047

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: EFIN ECON EINV ETRD ELAB EAIR AR
SUBJECT: ARGENTINA ECONOMIC AND FINANCIAL REVIEW, SEPTEMBER 14-17,
2009

1. (U) Provided below is Embassy Buenos Aires' Economic and
Financial Review covering the period September 14-17, 2009. The
unclassified email version of this report includes tables and charts
tracking Argentine economic developments. Contact Econ OMS Megan
Walton at WaltonM@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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GOA SUBMITS THE 2010 BUDGET TO CONGRESS
---------------------------------------

2. (SBU) On September 15, the GoA formally submitted the 2010 Budget
bill to Congress for approval. Minister of Economy Amado Boudou
appeared in the Chamber of Deputies to defend the Budget Bill on
September 17. According to press reports, the budget's main
macroeconomic projections include 2.5% GDP growth, a 7% average
inflation rate, a primary fiscal surplus of 2.7% of GDP (about ARP
27 billion or $6.8 billion), and an average exchange rate range of
3.95 ARP/USD. Total revenues are projected at ARP 273.7 billion
(about 22% of GDP) and total expenditures at ARP 273.1 billion
(mostly transfers to social security), which results in a financial
surplus (after interest payments) of ARP 621 million. The bill also
revised down 2009 GDP growth from the original 4% (included in the
2008 bill) to 0.5%, compared to private analyst forecasts of a 3-4%
GDP contraction for this year. The projection for 2010 is for
growth of 2.5%. Some private analysts, having predicted that the
Government would claim 2009 GDP growth of about 2%, have
acknowledged that the budget projections appear less unrealistic
than in recent years, but note that they still overstate growth and
understate inflation and the exchange rate. In a radio interview on
September 16, Minister Boudou said that the projections included in
the 2010 Budget bill are "in line with what happened this year, and
with the more favorable outlook for next year." He also highlighted
that given that 2010 debt obligations are low, the country will
continue reducing its debt, and noted that the bill includes
improvements in the areas of health and education. Post will follow
up with more details after receiving an official copy of the
budget.

--------------------------------------------- ---------
INDEC SURPRISES WITH HIGHER THAN EXPECTED CPI HEADLINE
--------------------------------------------- ---------
3. (SBU) National statistics agency INDEC announced September 11
that the August CPI increased 0.8% m-o-m, higher than higher than
the 0.5-0.7% m-o-m most private analysts expected it to announce,
but still below their own forecasts of 1.0-1.5% m-o-m inflation.
Inflationary pressures in August were quite widespread. Out of the
nine CP I subgroups, only one had inflation below 0.3% m-o-m, while
three subgroups had readings above 1.0% m-o-m, including: food and
beverages (1.2% m-o-m), clothing (1.1%) and medical and health care
expenditures (1.9% m-o-m). According to INDEC, the accumulated CPI
increase for the first eight months of the year was 4.2%, compared
to private estimates of about 10-15%. According to some analysts,
the slightly more accurate than expected inflation announcement may
indicate that the GoA is becoming more sensitive to the lack of
credibility of INDEC's published statistics and is seeking to
gradually improve the accuracy of its reporting. According to
INDEC, wholesale prices (WPI) increased 0.9% m-o-m in August, and a
total of 5.6% in the first eight months of 2009.

--------------------------------------------- ---
CONSUMER CONFIDENCE INDEX DECREASES IN SEPTEMBER
--------------------------------------------- ---

6. (SBU) Di Tella University's consumer confidence index slid for
the second consecutive month in September, decreasing 1.6% m-o-m to
40.02 points. In spite of this drop, the index has so far increased
8% for the first eight months of the year. Overall, the index
decreased 9.9% y-o-y and is well below its January 2007 historic
peak of 60.9 points. In September, two out of three index
components declined. Consumer sentiment towards the macroeconomic
environment decreased 1.9%. Consumer perception of personal
economic well-being decreased 2.8%. However, consumer willingness
to purchase durable goods and real estate increased 0.6%. (Note:
The index is based on surveys of individuals and consumers'
willingness to purchase durable goods, houses and cars in the first
two weeks of September.)

MARTINEZ

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