Argentina — страница 4

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its external debt to commercial creditors. By 1992 it had accumulated $8 billion in arrears as part of a $32 billion medium-term commercial bank debt. Public external debt was $61 billion. The government re-initiated partial payments in June 1990, and established a consistent record of paying about 25 percent of interest due. At the same time, it allowed external debt to be used in exchange for the sale of assets, which reduced the debt stock by $7 billion. The progressive improvement in fiscal fundamentals in 1990/91 allowed the government to begin negotiations with commercial banks on a debt reduction deal. An external debt agreement signed on April 7, 1993, reduced $28 billion in commercial bank debt by approximately 37 percent, and eliminated interest arrears. This debt deal

is expected to improve Argentina's creditworthiness. The agreement formalized arrears in a 12-year uncollateralized bond at LIBOR plus 13/16 with a 3-year grace period, after a $700 million downpayment. Existing debt was exchanged for collateralized par bonds with a fixed interest rate, or collateralized discount bonds at 65 percent of face value paying LIBOR. The new collateralized bonds will have a 12-month rolling interest guarantee. For most of the last decade, the government has paid only about half the legally mandated pensions owed social security recipients. Arrearages were not recorded in the fiscal accounts, but are estimated to be as high as $7 to 10 billion. To stop the accumulation of arrears, the government modified coparticipation in tax revenues in favor of the

social securiry system in August 1992. Since then, the social security system has run a small operating surplus. The government also accumulated arrears in 1990 with suppliers through formal suspension of payment on goods and services already provided, and the health funds have arrears with their service providers that will also result in new debt. Finally, the government, as part of its income tax reform, suspended poorly designed loss carry forward deductions for the corporate income tax, and agreed to issue compensatory bonds. To settle these claims, Congress authorized the government to issue consolidation bonds. The service of this debt will be capitalized until 1997, but payments on the order of $3 billion will be required in the last years of the decade. The federal

government's share of the proceeds of the privatization of the state oil company is earmarked for repurchasing some of the consolidation bonds. Social Security Reform The government has moved towards replacing a failed public pension system. In mid-1992 it submitted a law introducing a combined state/private system: the state would supply a uniform basic pension financed on a pay as you go basis while the private sector would supply pension funds. Membership in both schemes would be mandatory. The lower house of the Argentine Congress passed the law-with significant modifications--in May 1993. The government expects the legislative process to be completed before the end of the year, allowing a new system to be established in mid-1994. Trade, Deregulation and Financial Reforms In

1991 the government accelerated and largely completed a trade liberalization program that began in laIe 1986, but had suffered temporary reversals in 1989. Virtually all export taxes and quantitative restrictionsexcept for automobiles--were eliminated. The maximum ad valorem tariff was reduced from 115 to 35 percent. The deterioration in the trade balance in 1992, a consequence of massive capital inflows motivated government to use commercial policy to achieve effective devaluation within the fixed exchange rate regime. Exporter rebates were raised from 8 to 13 percent. On the import side, the tariff band was narrowed to O to 20 percent. The government also increased a flat tariff surcharge, called a statistical tax, from 3 percent to 10 percent on a temporary basis. This led to

an effective depreciation of about 5 percent. In May 1993 the government eliminated both tariffs and the statistical tax on capital goods imports, but in July it provided protection to some paper and textile products through temporary import quotas and tariff surcharges. A major domestic deregulation decree in October 1991 ended a series of market-impeding rules, dissolved several regulatory bodies, and unified pension and health insurance payments to reduce evasion. Subsequent decrees have deregulated pharmaceutical impons and ports. The industrial promotion program and subsidies to Tierra del Fuego were markedly reduced in November 1992. The publicly-owned housing and development banks, long subject to political influence and dependent on government financial support, are