VZCZCXRO7848
RR RUEHAO RUEHCD RUEHGD RUEHGR RUEHHO RUEHMC RUEHNG RUEHNL RUEHQU
RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
DE RUEHBU #1250/01 3171908
ZNR UUUUU ZZH
R 131906Z NOV 09
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 0032
INFO WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHSO/AMCONSUL SAO PAULO

UNCLAS SECTION 01 OF 02 BUENOS AIRES 001250 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EFIN ECON EINV ETRD ELAB EAIR AR
SUBJECT: Argentina Economic and Financial Review, November 6-12, 2009 
 
REF: 09 BUENOS AIRES 1175 
 
¶1. (U)  Provided below is Embassy Buenos Aires' Economic and 
Financial Review covering the period November 6-12, 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. 
 
 
 
--------------------------------------------- ---------------------- 
-------------------------- 
 
GOA HOPES TO MAKE FORMAL OFFER TO BOND HOLDOUTS 
 
--------------------------------------------- ---------------------- 
-------------------------- 
 
 
 
¶2. (SBU)  In statements to the press on November 8, Economy 
Minister Amado Boudou stated that the GoA hopes to make a formal 
offer to the holders of defaulted debt that did not participate in 
the 2005 restructuring operation (holdouts) in about 30 days, 
provided that by that time the GoA has completed all of the 
administrative, legal and regulatory clearances for the 
transaction.  In its efforts to maximize holdouts' participation, 
the GoA will go on a road-show to major international financial 
centers to meet with investors.  Boudou also noted that the GoA 
hopes to differentiate between retail and institutional investors 
if possible.  He added that, after the exchange, the GoA plans to 
issue bonds in international capital markets in the first quarter 
of 2010 to finance public investment. 
 
 
 
--------------------------------------------- -- 
 
U.S. Judge rules in favor of the GoA 
 
--------------------------------------------- -- 
 
 
 
¶3. (SBU)  U.S. District Court Judge Thomas Griesa of the Southern 
District of New York ruled November 5 that holdouts (who did not 
participate in the 2005 debt restructuring) cannot compel 
investment banks currently working with the GoA in a debt 
restructuring offer to provide details on the deal.  This ruling 
came in response to a motion filed in September by NML Capital to 
compel the banks -- Barclays, Citibank and Deutsche Bank -- engaged 
by Argentina to provide details about the debt offer.  In a 
November 5 press release, the Ministry of Economy said that, under 
the Court ruling, so-called vulture funds will not be given access 
to terms, bank fees and documents filed with the U.S. Securities 
and Exchange Commission (SEC) regarding the planned offer.  The 
release noted that the Court ruled against revealing details (of 
the offer) because it could interfere with negotiations as well as 
jeopardize GoA's capacity to go forward with the offer. 
 
 
 
--------------------------------------------- ---------------------- 
----------------------------- 
 
SENATE TO DEBATE SUSPENSION OF "BOLT LAW" NEXT WEEK 
 
--------------------------------------------- ---------------------- 
----------------------------- 
 
 
 
¶4. (SBU)  On November 11, the Budget and Treasury Committee of the 
Senate issued a favorable opinion on the bill to suspend the 
so-called "Bolt Law" (Ley Cerrojo), approved in 2005 as part of the 
original debt restructuring.  The Senate is expected to start its 
debate and approve it next week.  [Background: The law prevents the 
GoA from making additional offers to holdouts who did not 
participate in the 2005 debt restructuring without prior 
 
BUENOS AIR 00001250  002 OF 002 
 
 
authorization from the Congress.  For additional background, see 
October 30 - November 5 Argentina Economic and Financial Review.] 
 
 
 
--------------------------------------------- ------------------- 
 
CONGRESS APPROVES 2010 BUDGET BILL 
 
--------------------------------------------- ------------------- 
 
 
 
¶5. (SBU)  After a ten-hour debate, the Senate approved the 2010 
budget bill on November 12 (42 positive vs. 25 negative votes). 
The Chamber of Deputies had already approved the bill October 14. 
The budget's main macroeconomic projections include 2.5% GDP 
growth, a 6.1% average inflation rate, a primary fiscal surplus of 
2.3% of GDP (about ARP 28 billion), and an average exchange rate 
range of 3.95 ARP/USD.  The trade surplus is estimated at $14.2 
billion, with exports of $65 billion and imports of $51 billion. 
Consumption is forecast to increase 2.7% y-o-y after increasing 
only 0.9% in 2009, while investment is expected to jump 8% y-o-y, 
substantially recovering from its 9% decline in 2009.  Total 
revenues are projected at ARP 273.7 billion (about 22% of GDP) and 
total expenditures at ARP 273.1 billion, which results in a fiscal 
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 
2-3% contraction in GDP for 2009.  Along with the budget bill, the 
Senate approved the extension of five taxes, including  the income 
tax, the wealth tax, and the minimum presumed income tax for ten 
years; the financial transaction tax (FTT) for two years; and the 
tax on the final price of cigarettes for one year.  [For additional 
background and analysis on the 2010 Budget see reftel.] 
 
 
 
--------------------------------------------- ------------- 
 
GoA SETS new work-related insurance rules 
 
--------------------------------------------- ------------- 
 
 
 
¶6. (SBU)  On November 6, President Cristina Fernandez de Kirchner 
issued a decree that sets a minimum amount of ARP 180,000 in 
compensation for workers for work-related injuries, amending the 
"Work-Risk Law" enacted in 1995.  The decree also eliminates the 
ceiling on work injury claims, allowing injured workers to file 
claims for unlimited amounts of money.  The GoA decree is in 
response to five years of inconclusive negotiations by the GoA, 
unions, businesses and insurance companies.  The Minister of Labor 
Carlos Tomada acknowledged that the decree will not provide a final 
solution to the issue but claimed that it will diminish the number 
of lawsuits filed by workers for work related-accidents.  However, 
business groups (including the Argentine Chamber of Commerce, the 
Association of Argentine-private owned banks, the Argentine 
Construction Chamber, the Buenos Aires Stock Exchange and the 
Argentine Industrial Union) have countered in a public statement 
this week that the decree will increase labor costs and aggravate 
the already pressing and growing problem of lawsuits because 
workers will have a greater incentive to file lawsuits.  According 
to the chambers, workers have filed 70,000 work-related lawsuits in 
the first nine months of 2009. 
MARTINEZ