THE ARGENTINE ECONOMY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001900010012-4
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 4
• Document Creation Date: December 19, 2016
• Document Release Date: May 16, 2006
• Sequence Number: 12
• Publication Date: November 12, 1973
• Content Type: MF

 '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