Argentina - Current economic position and prospects

rILE S rY Report No. 540b-AR Current Economic Position and Prnnpcrts r- A rr;o kJI l /-IrCl I LII la February 20, 1975 Latin America and the Caribbean Regional Office Not for Public Use DocLimenit of the International Bank for Reconstruction and Development This report was prepared for official use only by the Bank Group. It may not be published. quoted or cited without Bank Groun authorization. The Bank Groun does not accept responsibility for the accuracy or completeness of the report.  rTMDVWTrTV VQlTT!TA T.TP. IJUsrzencyy UL,L. = NewPeos $a US$l = $a 5.00 (official Rate) $a 1 million = US$200,000 (official Rate) da TT,,illion - tTS$10rv 9r (Fi4nancil RPae) T.he exchloange rate of $ 98 = Tf $1 was7 used V this report, except where indicated otherwise.  TARLE OF CONTENTS Page No. MAP COUNTRY DATA SUMMARY AND CONCLUSIONS ........................ i-vii I. INTRODUCTION . .................................. 1 II. THE NEW ECONOMIC POLICIES AND CURRENT ECONOMIC A. Recent TrLends, 1973=74 ..... ............... 4 B. Economic Policies Since May 1973 .......... 5 III. DEVELOPMENT POLICY ISSUES ......................... 8 A. Overall Development Targets .8 B. Income Distribution and Pri cing Policy .... C. Public Finance ............................. 18 Overall Performance ........... ........ 18 Public Sector Revenues 2.. Public Sector Expenditures . .21 The Current Account Surplus. 21 The Tax Reform ..21 Development Policy ........................ 23 D. Mo netary Policy .........................,. 24 E. Agricultural Policy.. 25 a) Basic Considerations .25 b) Recent Developments and Current Outlook 30 Crop Production 30 Livestock .31 c) Major Issues .32 Relative Prices .32 Cyclical Fluctuations 34 Modernization of the Neat-packing Industry .35 Taxation of Agriculture .36 Credit Policy 36 Agricultural Infrastructure 37 Research and Extension .37 This report is based on the findings of an economic mission to Argentina in January/February 1974, composed of Messrs. Roberto Gonzalez-Cofino (Chief of Mission), Frederick Jaspersen, and Joerg-Uwe Richter.  TABLE OF CONTENTS (Conttd) Page No. d) Prospects for 1974-77 ........ ......... 38 F. Industrial Policy ...... .................... 43 Basic Considerations ..... .................. 43 Recent Developments and Current Outlook . 46 Industrial Development Strategy . .47 Export Expansion and Diversification .. 48 Industrial Finance . .48 Employment Creation ......... .. ............. 49 The Industrial Plan, 1974-77 .............. . 49 IV. THE FINANCING OF DEVELOPMENT .... ................ 50 A. Investment Requirements .50 Global Investment Requirements ........... .. 50 Private Investment Requirements . .51 Public Sector Investment Requirements .. 51 B. Savings and the Financing of Development ... 53 Recent Trends .............. ................ 53 Future Requirements ......... .. ............. 54 C. Financing of Public Investment .56 Public Sector Savings ........ .. ............ 59 Public Investment Financing Plan ........... 59 V. BALANCE OF PAYMENTS .............. ............... 64 A. Recent Trends .64 Overall Performance ...... .................. 64 Merchandise Exports =-65 Merchandise Imports ........................ 67 rani tnl Moernents =. .67 B. Prospects....... ............... 69 Prospects for 1974 . .- 69 Medium-Term Prospects . .70 External Gapital Re-Uire.n.ents .. . . . . . . . . . . . . ....73 External Debt Management ................... 73 STATISTICAL APPENDIX  - : - j y osalto 0/ \