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Document Creation Date: 
December 19, 2016
Document Release Date: 
May 16, 2006
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Publication Date: 
November 12, 1973
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PDF icon CIA-RDP85T00875R001900010012-4.pdf102.2 KB
'Approved For ele a M6926',.JMA-RD ~~'T005rg.8V0J0042- 12 November 1973 MEMORANDUM FOR: 25X1A SUBJECT : e Argentina Economy Attached is the material you requested in support of your liaison efforts. If we can be of further assistance, please contact e , Latin Americ?i Branch, OER Attachment: As stated Distribution: (S-5655) Orig. & 1 - Addressee 1 - D/OER 1 - D/D 1 - CA/ER 1 - St/P 1 - D/LA OE1/D/LA (12 Nov 73) Approved For Release 2006/09/26 : CIA-RDP85T00875R001900010012-4 Approved For Release 2006/09/26 : CIA-RDP85T00875R001900010012-4 The Argentina Economy 1. With GDP expected to rcgistor a 4%-4.5% increase ,in 1973 and trade surpluses of $600-$800 million, Argentina's economic state has improved over last year. Price freezes and rollbacks instituted in June appear to have reduced inflation for the year to the point where it will probably end up at around 35% to 45%, compared with the 56% registered in 1972. 2. Despite these improvements, problems continue to plague the Argentine economy which, if not corrected, could lead to a serious deterioration. Public spending continues to outpace revenues and the total deficit for 1973 could well exceed 8% of GDP. Treasury outlays traditionally have amounted to 8%--9% of GDP. In addition, artifically low prices for agricultural products, combined with increasing disincentives to production threaten to seriously undermine the chief source of Argentina's foreign exchange earnings. Argentina is expected to have only about 700,000 tons of exportable wheat surplus from the December/January harvest, compared with 3.2 million tons exported from the 1972/73 harvest. It is clear that a good corn crop and continued high world prices will be essential if Argentina is to avoid serious balance of payments problems in 1974. At present, Argentina's external debt 25X1 Approved For Release 2006/09/26 : CIA-RDP85T00875 - Ilk- Approved For Release 2006/09/26 : CIA-RDP85T00875R001900010012-4 stands at some $3,.2 billion and service payments plus inelastic demand for the import of intermediate goods will make adequate export earnings essential if an economic recession is to be avoided. 3. Poron has aggressively continued and expanded previous regimes' policies of promotion of non-traditional exports. This is evident in a $200 million credit granted Cuba in August, as well as substantial credits to Chile for tha purchase of Argentine goods -- mainly manufactures. nl'r.ile t;:iL policy will help offset revenue losses from lowered wheat and beef exports, the financing mechanisms may further exacerbate domestic inflationary pressures. If present price controls continue, the decline in agricultural ?roducticn and disincentives to domestic production caused by low profit margins will lead to greater and more frequent sho:-tages of both consumer and producer goods. If wage demands _ead to large increases in early 1974 while prices remain frozen, the situation will worsen. CIA/OER 9 November 1973 Approved For Release 2006/09/26 : QMDP85T00875R001900010012-4