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DE RUEHBU #1318/01 3381437
ZNR UUUUU ZZH
R 041435Z DEC 09
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 0143
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 001318 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EFIN ECON EINV ETRD ELAB EAIR AR
SUBJECT: Argentina Economic and Financial Review, November 
26-December 3, 2009 
 
REF: 09 BUENOS AIRES 1175 
 
¶1. (U)  Provided below is Embassy Buenos Aires' Economic and 
Financial Review covering the period November 26 - December 3, 
¶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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November Tax Revenue jumped 20% y-o-y to ARP 26 billion 
 
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¶2. (SBU)  On December 2, President Cristina Fernandez de Kirchner 
announced that preliminary figures show that November tax 
collections increased 20% y-o-y to ARP 26 billion.  This result is 
much stronger than the increases of less than 10% in each of the 
past three months and in line with market estimates.  The President 
stated that "we are returning to double digit rate increases" in 
revenue, stressing that the improvement (in collection) is a direct 
result of recent GoA measures to jumpstart the economy.  The Tax 
Authority plans to issue detailed tax revenue data on December 3. 
 
 
 
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October Trade Surplus improves to $1.2 billion as exports decline 
but imports plummet 
 
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¶3. (SBU)  On November 20, the National Bureau of Statistics (INDEC) 
announced that the October trade surplus reached $1.2 billion, 
higher than the $1.0 billion expected by private analysts and the 
$1.0 billion achieved in October of 2009.  While exports declined 
21% y-o-y to $4.8 billion, their decline has decelerated compared 
to the previous three months when they dropped 34% on average. 
Imports remained depressed, dropping 29% y-o-y to $3.6 billion 
(close to the September 2009 figure).  The y-o-y decline in imports 
reflects weak domestic activity, new trade restrictions, and the 
impact of a weaker peso.  In October, export volume declined by 8% 
y-o-y, while export prices dropped 14% y-o-y.  On the other hand, 
the 29% decline in imports was driven by an 18% decline in volumes 
and a 13% drop in prices.  Exports of primary goods declined 54% 
y-o-y, with quantities exported down 41% y-o-y (affected by a very 
high basis of comparison) and prices down 21% y-o-y.  Exports of 
industrial goods declined 12% y-o-y while exports of manufacturing 
goods of primary origin dropped 16% y-o-y.  In the first ten months 
of the year, the trade surplus rose to $14.4 billion from $11.2 
billion in the same period last year (up 29%), reflecting a 25% 
drop in exports that was more than offset by a 37% drop in imports. 
The trade surplus is expected to close the year at around $16 
billion, according to private estimates. 
 
 
 
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Wages keep increasing as October's wage index rose 1.60% m-o-m 
 
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¶4. (SBU)  INDEC announced December 1 that the wage index increased 
1.60% m-o-m in October.  This figure exceeded expectations of 
1.30%, as measured by a survey conducted by the BCRA.  However, the 
 
BUENOS AIR 00001318  002 OF 002 
 
 
October figure represents a slight deceleration from September's 
increase of 1.70% m-o-m.  The survey indicated that private and 
public sector salaries rose 1.89% and 3.28%, respectively, while 
private informal wages decreased 1.15%.  The cumulative increase of 
the index in the first ten months of the year was 14.4%.  The BCRA 
survey forecasts an overall 15.9% increase in the wage index for 
2009, and 14.5% for 2010, compared to the previous month's forecast 
of increases of 15% and 13%, respectively.  These results indicate 
an accelerating wage growth trend for the upcoming period.  In 
tandem, private sector analysts are revising upwards their 
inflation estimates for next year to 17- 20%.  [Note: This index 
defines wages as a price, without considering hours worked or 
special payments for productivity gains.] 
 
 
 
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November labor demand index down 3% m-o-m 
 
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¶5. (SBU)  The November labor demand index calculated by Di Tella 
University decreased 3% m-o-m to 47.7 points, far below the 110 
peak reached in February 2008, when it started its decline.   The 
index is currently 44% below its historic average of 85.2.  So far 
this year, the index has decreased cumulatively by 22%.  According 
to Di Tella University, in spite of the negative trend of the index 
so far this year, the negative growth rate has decelerated.  Di 
Tella forecasts a more positive labor market outlook for 2010, with 
the trend expected to turn positive in the first quarter and the 
index to continue to move upward through the second half of 2010. 
[The Di Tella index is based on comparisons of job vacancy 
announcements printed in the two largest newspapers of the 
country.] 
 
 
 
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Gold/silver mine project to begin after eight-year delay 
 
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¶6. (SBU)  The Pascua Lama open pit mining project, reputed to be 
the first binational mining project in South America, was finally 
approved by the Argentine and Chilean governments after eight years 
of legal disputes and delays.  The environmental review took a very 
long time, with local authorities imposing over 400 conditions on 
Toronto-based Barrick Gold, a leading mining company, which first 
began participation in the project in the nineties.  Operations 
will now begin, with the development of the mine expected to be 
completed by the end of 2012. Pascua Lama's annual output, which 
includes production in both Chile and Argentina (75% in Chile) is 
projected at 750,000 ounces of gold and 35 million ounces of silver 
during the first five years of operation. The mine is located on 
the frontier between Huasco (Chilean side) and San Juan (Argentine 
side), at an altitude of over 4,500 meters.  Its development will 
require an estimated total investment of USD 3 billion. 
MARTINEZ