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DE RUEHBU #0976/01 2381604
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O 261604Z AUG 09
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4275
INFO RUCNMER/MERCOSUR COLLECTIVE IMMEDIATE
RHMFISS/HQ USSOUTHCOM MIAMI FL IMMEDIATE
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC IMMEDIATE
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C O N F I D E N T I A L BUENOS AIRES 000976 
 
SIPDIS 
 
TREASURY FOR NLEE/LTRAN/WLINDQUIST, DEPT PASS TO USTR FOR 
KKALUTKIEWICZ 
 
E.O. 12958: DECL: 08/26/2029 
TAGS: EAGR ECON EFIN ENIV ETRD KSUM PREL AR

SUBJECT: ARGENTINE MINISTER OF ECONOMY SAYS GOA IS READY TO 

ENGAGE IMF, ACCESS INTERNATIONAL CREDIT MARKETS 

 

Classified By: Classified By: CDA Tom Kelly for reasons 1.4 (b) and (d) 

 

¶1. (C) Summary: CDA met August 24 with Minister of Economy 

and Public Finances Amado Boudou and discussed the upcoming 

G-20 Summit in Pittsburgh, Argentina's re-engagement with the 

IMF, an agreement with Paris Club debtors and bond holdouts, 

as well as Argentina's fiscal and economic outlook.  Not 

surprisingly, Boudou was generally upbeat about Argentina's 

current economic situation and prospects in the coming year. 

While Argentina wants to regain access to the international 

credit markets and hopes to have an agreement with the IMF 

and its Paris Club creditors by year's end, Boudou stressed 

that Argentina is under no fiscal pressure to do so but 

rather is doing so in order to help lower borrowing costs for 

Argentine producers and stimulate employment.  End Summary. 

 

¶2. (C) CDA, accompanied by EconCouns, opened the meeting by 

asking Boudou (who was alone) Argentina's perspective on the 

upcoming G-20 Summit.  Boudou noted that he will be attending 

the meeting next week of G-20 finance ministers in London in 

preparation for the September 24-25 G-20 Summit in 

Pittsburgh.  He said that Argentina is going into the meeting 

with a fairly strong financial and fiscal position.  The 

level of public debt is low; the Government has easily met 

its relatively low debt servicing obligations, and will 

continue to do so through 2010; and the GoA's fiscal and bank 

liquidity situation is ""very good.""  Boudou said that the 

government's strategy now is to lower the opportunity and 

borrowing costs for private sector producers through lower 

interest rates which can be achieved if Argentina has access 

to international credit markets. 

 

¶3. (C) CDA asked if reaching an accommodation with the IMF is 

part of the GOA strategy.  Boudou said that the GOA wants to 

normalize relations with the IMF, including a possible 

Article IV review by year-end, so long as the review does not 

include IMF prescriptions/conditionality.  Boudou said that 

the GOA also wants to re-engage with EXIM and other foreign 

export credit agencies, recognizing this will require working 

with the U.S. and other official creditors to clear 

Argentina's Paris Club arrears through either 

(IMF-sanctioned) rescheduling or other means which Argentina 

hopes to achieve by the end of the year.  Boudou confirmed 

recent press reports that the GOA is also discussing ways to 

reach a settlement with the private bond holdouts. 

 

¶4. (C) Boudou stressed that, while Argentina very much 

welcomes new foreign investment and access to foreign capital 

that will boost Argentine employment, the GOA is under little 

fiscal or economic pressure to do so.  While 2009 will be a 

bad year, with zero economic growth, Boudou said the GoA 

forecasts growth between 3-4 percent in 2010, giving 

Argentina positive growth in seven out of the last eight 

years.  CDA asked if reports of fiscal problems in the 

provincial budgets were true.  Boudou said the situation in 

some of the provinces has deteriorated, blaming them for 

building up their payrolls unsustainably.  He contrasted this 

with the GoA's ""more responsible"" countercyclical approach, 

which he claimed had boosted aggregate demand during this 

recessive period through increased public investment rather 

than via current expenditures.  He said the GOA would not 

authorize provincial governments to issue bonds as a way out 

of the mess, noting that he intended to turn down such a 

request by Cordoba, the country's second-most-populous 

province.  (Officially, that request is pending.) 

 

¶5. (C) On the issue of inflation, Boudou said that there has 

been an overemphasis on data in Buenos Aires that indicates 

continued upward pressure on prices for higher value goods. 

Boudou said that GoA data shows that, as is historically 

true, prices remain stable in most of the provinces outside 

Buenos Aires, as well as for lower value goods generally, 

meaning that rising inflation has not adversely impacted 

Argentines at the lower end of the wage scale.  Boudou also 

noted that the Argentine Central Bank (BCRA) has a monetary 

plan in place to ensure price stability. 

 

¶6. (C) Comment: Now a month in office, Boudou seemed much 

more loquacious and confident than his predecessor, Carlos 

Fernandez, and more comfortable in his skin than Martin 

Lousteau, Cristina Fernandez de Kirchner's first Economic 

Minister.  He came across as a poised, confident interlocutor 

who is eager to engage on resolving the legacy issues that 

stand in the way of Argentina returning to the international 

credit and capital markets.  He'll need those skills and more 

 

 

as he attempts to sell economic policies that are broadly 

seen as negligent and irresponsible.  Boudou's optimism 

contrasts sharply with new reports that the GoA's fiscal 

situation continues to decline along with an economy now 

firmly in recession, and highlighted by Lousteau in an August 

24 television interview in which he described the GoA as in 

denial over the deteriorating fiscal/financial situation. 

 

¶7. (C) Boudou must perform a delicate balancing act to 

achieve the rapprochement with capital markets that he 

professes to want.  He needs to constructively engage key 

foreign interlocutors, including the Fund, the Paris Club, 

and the hold-outs, without losing the confidence of his de 

facto boss, Nestor Kirchner.  Given that dilemma, his rosy 

presentation of Argentina's fiscal and economic situation was 

not surprising, nor was his assertion, in classic Kirchner 

style, that Argentina is ready to deal, but only on its terms 

and without pre-conditions.  But Boudou's charm offensive 

with international capital markets is clearly on.  The GoA 

press line was that the meeting with the CDA was part of the 

GoA's newly launched campaign to rejoin international capital 

markets, and this campaign will likely be its theme at 

upcoming G-20 meetings.  Boudou is also meeting this week 

with IMF Director Western Hemisphere Director (and former 

Chilean Finance Minister) Nicolas Eyzaguirre on the margins 

of a Council of Americas meeting in Buenos Aires which the 

GoA is publicly promoting.  End Comment 

KELLY 


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