Tue, May 20, 2003 - Page 7 News List

Argentina's future leader unveils steps to revive economy

AFP , BUENOS AIRES, ARGENTINA

Argentina's president-elect Nestor Kirchner said Sunday that he would increase utility rates, just days after he was elected by default when his rival dropped out of the race.

Kirchner, who has said his first priority would be to battle the poverty that affects almost 60 percent of Argentina's 32 million people, promised that the rate increases would be modest.

"It's going to be a smaller increase than many think," he told the Pagina/12 newspaper.

Previous attempts by the government to hike the rates, under pressure from the European companies that provide such services as water, telephone and electricity, have been defeated by the courts.

Argentina's utilities were privatized in the 1990s under president Carlos Menem, who granted Kirchner victory by dropping out of the run-off election.

Utility companies want to raise their rates to balance out their costs after the peso lost two-thirds of its value in January last year.

Kirchner also told the paper that the peso's current value of nearly three to one US dollar was the right exchange rate.

"I want a competitive dollar, a dollar at three pesos is good for Argentina," he said.

Kirchner added that he was planning a public works program to bolster the economy.

"We don't want public works based on debt, we want public works with genuine growth," he said. "The first step will be to finish all the uncompleted projects in the country, as many housing and infrastructure projects have been abandoned."

Kirchner faces a daunting task in reviving an economy that was once a regional powerhouse.

One of his first tasks after taking office on May 25 will be the renegotiation of more than US$55 billion in foreign debt on which Argentina defaulted in December 2001.

Kirchner's government also will rapidly need to negotiate an agreement with the IMF, which had pledged US$2.98 billion to repay Argentina's debts to multilateral organizations, in a bid to tide the troubled country over until after the election.

His government team also will face the arduous task of restructuring the financial system that was rocked by heavy turbulence last year, as bank savings were frozen and the currency's peg to the US dollar was scrapped.

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