Keep Us Strong WikiLeaks logo

Currently released so far... 97115 / 251,287

Articles

Browse latest releases

Browse by creation date

Browse by origin

A B C D F G H I J K L M N O P Q R S T U V W Y Z

Browse by tag

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
ETRD EAGR ETTC EAID ECON EFIN ECIN EINV ELAB EAIR ENRG EPET EWWT ECPS EIND EMIN ELTN EC ETMIN EUC EZ ET ELECTIONS ENVR EU EUN EG EINT ER ECONOMICS ES EMS ENIV EEB EN ECE ECOSOC EK ENVIRONMENT EFIS EI EWT ENGRD ECPSN EXIM EIAD ERIN ECPC EDEV ENGY ECTRD EPA ESTH ECCT EINVECON ENGR ERTD EUR EAP EWWC ELTD EL EXIMOPIC EXTERNAL ETRDEC ESCAP ECO EGAD ELNT ECONOMIC ENV ETRN EIAR EUMEM ENRGPARMOTRASENVKGHGPGOVECONTSPLEAID EREL ECOM ECONETRDEAGRJA ETCC ETRG ECONOMY EMED ETR ENERG EITC EFINOECD EURM EENG ERA EXPORT ENRD ECONEINVETRDEFINELABETRDKTDBPGOVOPIC EGEN EBRD EVIN ETRAD ECOWAS EFTA ECONETRDBESPAR EGOVSY EPIN EID ECONENRG EDRC ESENV ETT EB ENER ELTNSNAR ECHEVARRIA ETRC EPIT EDUC ESA EFI ENRGY ESCI EE EAIDXMXAXBXFFR EETC ECIP EIAID EIVN EBEXP ESTN EING EGOV ETRA EPETEIND ELAN ETRDGK EAIDRW ETRDEINVECINPGOVCS EPEC ENVI ELN EAG EPCS EPRT EPTED ETRB EUM EAIDS EFIC EFINECONEAIDUNGAGM EAIDAR ESF EIDN ELAM EDU EV EAIDAF ECN EDA EXBS EINTECPS ENRGTRGYETRDBEXPBTIOSZ EPREL EAC EINVEFIN ETA EAGER EINDIR ECA ECLAC ELAP EITI EUCOM ECONEFINETRDPGOVEAGRPTERKTFNKCRMEAID EARG ELDIN EINVKSCA ENNP EFINECONCS EFINTS ECCP ETC EAIRASECCASCID EINN ETRP EAIDNI EFQ ECOQKPKO EGPHUM EBUD ECONEINVEFINPGOVIZ ENERGY ELB EINDETRD EMI ECONEFIN EIB EURN ETRDEINVTINTCS EIN EFIM ETIO ELAINE EMN EATO EWTR EIPR EINVETC ETTD ETDR EIQ ECONCS EPPD ENRGIZ EISL ESPINOSA ELEC EAIG ESLCO EUREM ENTG ERD EINVECONSENVCSJA EEPET EUNCH ECINECONCS ETRO ETRDECONWTOCS ECUN EFND EPECO EAIRECONRP ERGR ETRDPGOV ECPN ENRGMO EPWR EET EAIS EAGRE EDUARDO EAGRRP EAIDPHUMPRELUG EICN ECONQH EVN EGHG ELBR EINF EAIDHO EENV ETEX ERNG ED
KMDR KPAO KPKO KJUS KCRM KGHG KFRD KWMN KDEM KTFN KHIV KGIC KIDE KSCA KNNP KHUM KIPR KSUM KISL KIRF KCOR KRCM KPAL KWBG KN KS KOMC KSEP KFLU KPWR KTIA KSEO KMPI KHLS KICC KSTH KMCA KVPR KPRM KE KU KZ KFLO KSAF KTIP KTEX KBCT KOCI KOLY KOR KAWC KACT KUNR KTDB KSTC KLIG KSKN KNN KCFE KCIP KGHA KHDP KPOW KUNC KDRL KV KPREL KCRS KPOL KRVC KRIM KGIT KWIR KT KIRC KOMO KRFD KUWAIT KG KFIN KSCI KTFIN KFTN KGOV KPRV KSAC KGIV KCRIM KPIR KSOC KBIO KW KGLB KMWN KPO KFSC KSEAO KSTCPL KSI KPRP KREC KFPC KUNH KCSA KMRS KNDP KR KICCPUR KPPAO KCSY KTBT KCIS KNEP KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG KNNB KGCC KINR KPOP KMFO KENV KNAR KVIR KDRG KDMR KFCE KNAO KDEN KGCN KICA KIMMITT KMCC KLFU KMSG KSEC KUM KCUL KMNP KSMT KCOM KOMCSG KSPR KPMI KRAD KIND KCRP KAUST KWAWC KTER KCHG KRDP KPAS KITA KTSC KPAOPREL KWGB KIRP KJUST KMIG KLAB KTFR KSEI KSTT KAPO KSTS KLSO KWNN KPOA KHSA KNPP KPAONZ KBTS KWWW KY KJRE KPAOKMDRKE KCRCM KSCS KWMNCI KESO KWUN KPLS KIIP KEDEM KPAOY KRIF KGICKS KREF KTRD KFRDSOCIRO KTAO KJU KWMNPHUMPRELKPAOZW KEN KO KNEI KEMR KKIV KEAI KWAC KRCIM KWCI KFIU KWIC KCORR KOMS KNNO KPAI KBWG KTTB KTBD KTIALG KILS KFEM KTDM KESS KNUC KPA KOMCCO KCEM KRCS KWBGSY KNPPIS KNNPMNUC KWN KERG KLTN KALM KCCP KSUMPHUM KREL KGH KLIP KTLA KAWK KWMM KVRP KVRC KAID KSLG KDEMK KX KIF KNPR KCFC KFTFN KTFM KPDD KCERS KMOC KDEMAF KMEPI KEMS KDRM KEPREL KBTR KEDU KNP KIRL KNNR KMPT KISLPINR KTPN KA KJUSTH KPIN KDEV KTDD KAKA KFRP KWNM KTSD KINL KJUSKUNR KWWMN KECF KWBC KPRO KVBL KOM KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG KEDM KFLD KLPM KRGY KNNF KICR KIFR KM KWMNCS KAWS KLAP KPAK KDDG KCGC KID KNSD KMPF KPFO KDP KCMR KRMS KNPT KNNNP KTIAPARM KDTB KNUP KPGOV KNAP KNNC KUK KSRE KREISLER KIVP KQ KTIAEUN KPALAOIS KRM KISLAO KWM KFLOA
PHUM PINR PTER PGOV PREL PREF PL PM PHSA PE PARM PINS PK PUNE PO PALESTINIAN PU PBTS PROP PTBS POL POLI PA PGOVZI POLMIL POLITICAL PARTIES POLM PD POLITICS POLICY PAS PMIL PINT PNAT PV PKO PPOL PERSONS PING PBIO PH PETR PARMS PRES PCON PETERS PRELBR PT PLAB PP PAK PDEM PKPA PSOCI PF PLO PTERM PJUS PSOE PELOSI PROPERTY PGOVPREL PARP PRL PNIR PHUMKPAL PG PREZ PGIC PBOV PAO PKK PROV PHSAK PHUMPREL PROTECTION PGOVBL PSI PRELPK PGOVENRG PUM PRELKPKO PATTY PSOC PRIVATIZATION PRELSP PGOVEAIDUKNOSWGMHUCANLLHFRSPITNZ PMIG PREC PAIGH PROG PSHA PARK PETER POG PHUS PPREL PS PTERPREL PRELPGOV POV PKPO PGOVECON POUS PGOVPRELPHUMPREFSMIGELABEAIDKCRMKWMN PWBG PMAR PREM PAR PNR PRELPGOVEAIDECONEINVBEXPSCULOIIPBTIO PARMIR PGOVGM PHUH PARTM PN PRE PTE PY POLUN PPEL PDOV PGOVSOCI PIRF PGOVPM PBST PRELEVU PGOR PBTSRU PRM PRELKPAOIZ PGVO PERL PGOC PAGR PMIN PHUMR PVIP PPD PGV PRAM PINL PKPAL PTERE PGOF PINO PHAS PODC PRHUM PHUMA PREO PPA PEPFAR PGO PRGOV PAC PRESL PORG PKFK PEPR PRELP PREFA PNG PGOVPHUMKPAO PRELECON PINOCHET PFOR PGOVLO PHUMBA PRELC PREK PHUME PHJM POLINT PGOVPZ PGOVKCRM PGOVE PHALANAGE PARTY PECON PEACE PROCESS PLN PRELSW PAHO PEDRO PRELA PASS PPAO PGPV PNUM PCUL PGGV PSA PGOVSMIGKCRMKWMNPHUMCVISKFRDCA PGIV PRFE POGOV PEL PBT PAMQ PINF PSEPC POSTS PHUMPGOV PVOV PHSAPREL PROLIFERATION PENA PRELTBIOBA PIN PRELL PGOVPTER PHAM PHYTRP PTEL PTERPGOV PHARM PROTESTS PRELAF PKBL PRELKPAO PKNP PARMP PHUML PFOV PERM PUOS PRELGOV PHUMPTER PARAGRAPH PERURENA PBTSEWWT PCI PETROL PINSO PINSCE PQL PEREZ PBS

Browse by classification

Community resources

courage is contagious

Viewing cable 06BUENOSAIRES2798, A SURPLUS 2007 BUDGET DESIGNED TO BOLSTER KIRCHNER

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs

Understanding cables
Every cable message consists of three parts:
  • The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
  • The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
  • The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
To understand the justification used for the classification of each cable, please use this WikiSource article as reference.

Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #06BUENOSAIRES2798.
Reference ID Created Released Classification Origin
06BUENOSAIRES2798 2006-12-20 20:44 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Buenos Aires
VZCZCXYZ0000
RR RUEHWEB

DE RUEHBU #2798/01 3542044
ZNR UUUUU ZZH
R 202044Z DEC 06
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 6810
INFO RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUCPDOC/USDOC WASHINGTON DC
UNCLAS BUENOS AIRES 002798 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E FOR THOMAS PIERCE, WHA FOR WHA/BSC AND WHA/EPSC 
PASS NSC FOR JOSE CARDENAS 
PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE 
PASS USTR FOR SUE CRONIN AND MARY SULLIVAN 
TREASURY FOR NANCY LEE, ALICE FAIBISHENKO 
USDOC FOR ALEXANDER PREACHER AND JOHN ANDERSEN 
US SOUTHCOM FOR POLAD 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV AR
SUBJECT: A SURPLUS 2007 BUDGET DESIGNED TO BOLSTER KIRCHNER 
ADMINISTRATION'S RE-ELECTION BID 
 
 
Summary 
------- 
1. (SBU) The Argentine Senate approved the 2007 National 
Budget December 13, 2006, in the face of opposition criticism 
over its growth and inflation assumptions, the continuation 
of "superpowers" that allow the GoA to make future fiscal 
decisions without Congressional authorization, and the lack 
of transparency in disbursement of subsidy payments.  The 
Budget estimates federal revenues at ARP 128.5 billion 
(approx. $41.5 billion or 18% of GDP), and expenditures are 
forecast at ARP 121.3 billion (approx. $39.1 billion or 17% 
of GDP), achieving an overall balance of 1% of GDP and 
primary fiscal surplus of 3.03% of GDP.  The Kirchner 
administration has tailored the 2007 Budget to help it win 
the October 2007 presidential elections.  The Budget 
underestimates resources, envisions a significant increase in 
social expenditures, and considers GoA refinancing of 
provincial debt, all of which should win Kirchner votes.  End 
Summary. 
 
Senate Passes 2007 Budget Bill Into Law 
--------------------------------------- 
2. (SBU) The GoA sent its fiscal year 2007 (which corresponds 
to the calendar year) Budget bill to Congress September 15 as 
required by the Constitution, and Minister of Economy Felisa 
Miceli presented it to the Chamber of Deputies for its 
approval on September 26.  The Chamber passed the bill 
November 23 (with 143 votes in favor, 77 against, 6 
abstentions), and the Senate approved it without modification 
on December 13 (with 41 votes in favor and 22 against). 
 
3. (SBU) During debate in both houses, the opposition 
criticized the budget for underestimating both GDP growth and 
revenue prospects, setting the stage for the GoA to use 
surplus tax revenues to finance discretionary pre-election 
social policy and targeted infrastructure development 
expenditures.  They also criticized the so-called 
"Superpowers" Law, which allows the GoA to make subsequent 
changes to the budget without prior Congressional approval. 
The opposition also expressed concern over increasing 
subsidies, mainly to the energy and transportation sectors, 
and criticized the lack of transparency in the disbursement 
of such funds.  (Note:  Congress approved the "superpowers" 
law August 2 as an amendment to the existing Financial 
Administrative Law.  The amendment gives te GoA the legal 
ability to modify the Budget Law and reallocate funds 
regardless of the provisions of the Financial Administrative 
Law or the Fiscal Responsibility Law, and without consulting 
Congress.  Although opposition parties are seeking to repeal 
the "superpowers," the GoA's majority support in the House 
and Senate makes this unlikely.  End Note). 
 
Conservative Macroeconomic Assumptions 
-------------------------------------- 
4. (SBU) The Budget's macroeconomic assumptions are 
conservative compared to private analysts' economic 
forecasts, as measured in the central bank's (BCRA's) 
consensus survey from September.  GDP is forecast to increase 
only 4% in 2007, well below the current BCRA consensus 
forecast of 6.3%.  The Kirchner administration has used this 
strategy of underestimating growth in past budgets -- 
underestimating revenues by ARP 19 billion (31% of total 
revenues) in 2004, ARP 11 billion (13% of total revenues) in 
2005, and ARP 14 billion (14% of total revenues) in 2006 -- 
and it allows the administration to spend excess revenues at 
the end of the year with only perfunctory Congressional 
approval (Note: The Kirchner administration's solid majority 
support in both houses of Congress makes Congressional 
approval a sure thing.  End Note). 
 
5. (SBU) As in previous years, the opposition in both houses 
harshly criticized the growth assumption, claiming it 
underestimates revenues by ARP 8 - 12 billion (approx. $2.6 - 
3.9 billion, or 6-9% of total revenue).  However, Minister 
Miceli has publicly defended budget assumptions, arguing (in 
a reference to a succession of budget deficits in the 1990s 
 
 
 
 
 
that required the GoA to increase its borrowing in 
international capital markets), that, "generating 
expectations for revenues that the GoA cannot fulfill would 
be a return to the past."  She further explained that the GoA 
will prioritize spending of any higher than projected 
revenues on education, retirement benefits, and higher wages 
for state employees. 
 
6. (SBU) The Budget also lowballs other assumptions.  It 
estimates CPI inflation at 7.7%, compared to the BCRA 
consensus survey forecast of 10.5%.  It assumes an average 
nominal exchange rate of 3.13 ARP/USD, compared to the BCRA 
consensus survey of 3.20 and the 2006 Budget assumption of 
3.09.  It forecasts export growth of 7.8% and import growth 
of 10.7% in 2007 (in real terms), resulting in an $8.1 
billion trade surplus ) substantially below the BCRA's $9.6 
billion consensus forecast.  Finally, the budget forecasts 
investment growth of 7.2%, compared to the BCRA consensus 
forecast of 13%, with total investment in 2007 reaching 23.3% 
of GDP.  The budget forecasts nominal GDP to reach ARP 694 
billion (approximately $224 billion) by the end of 2007. 
 
Macroeconomic Assumptions For 2007 
---------------------------------- 
                                           Market 
                              Budget    Expectations 
--------------------------------------------- -------- 
GDP (real growth)               4.0             6.3 
Consumption (real growth)       3.3             5.9 
Investment (real growth)        7.2             13.0 
Exports (USD in billions)       52.6             48.3 
Imports (USD in billions)       44.4             38.7 
Inflation (average)             7.7            10.5 
Nominal Exchange Rate (average) 3.13            3.20 
--------------------------------------------- -------- 
 
Revenues: Increase Driven By Economic Activity 
--------------------------------------------- -- 
7. (SBU) Federal revenues are estimated at ARP 128.5 billion 
(approx. $41.5 billion or a 16% nominal and 9% real increase 
over 2006), equivalent to 18% of GDP.  Tax revenues account 
for 74% of federal revenues, social security contributions 
for 20%, and non-fiscal revenues, mainly financial profits 
from GoA financial investments, revenues from the sales of 
GoA machinery and real estate, and BCRA profits, total ARP 7 
billion ($2.26 billion or 5% of total revenues).  The fiscal 
burden (total tax collection and social security 
contributions) will reach 17.5% of GDP in 2007, compared to 
16.8% in 2006. 
 
8. (SBU) The Budget estimates total tax revenue at ARP 95.3 
billion (approx. $30.7 billion), an increase of 13% in 
nominal terms and 6% in real terms over 2006 (Note:  this 
calculation uses the GoA's 2007 7.7% CPI inflation target. 
End Note).  This forecast is based on expected nominal price 
increases, and strong economic activity, employment, and 
trade, as well as an improvement in tax compliance.  The 
highest increases are: import taxes ( 15.4%), export taxes 
( 14.4%), financial transactions tax ( 13.9%), and income tax 
( 12.7%). 
 
9. (SBU) Tax revenues account for 64% of the increase in 
total revenue.  Social Security contributions comprise 28% of 
the increase in revenue, and are estimated at ARP 26 billion 
(approx. $8.4 billion; a 24% nominal and 16% real increase 
versus 2006).  This is due to the expected increase in 
nominal salaries as well as an increase in the number of 
contributors. 
 
10. (SBU) The GoA's 2007 budget does not envision changing 
tax regulation, unlike in previous years when it considered 
the elimination or phase-out of the export and financial 
transactions (FTT) taxes.  The IMF -- supported by many in 
the opposition -- has consistently advocated the elimination 
of both taxes, which represent 28% of fiscal revenue, due to 
their distortive impact.  However, the Kirchner 
 
 
administration's congressional majority has refused to 
support a reduction of either tax, since that would eliminate 
the GoA's primary fiscal surplus.  (Note: Export tax revenues 
reached ARP 12 billion and FTT ARP 9.3 billion during the 
first ten months of 2006, and the primary fiscal surplus 
reached ARP 21.2 billion, or 3.5% of GDP on an annualized 
basis.  100% of export tax revenues and 70% of FTT revenues 
are not subject to co-participation with the Provinces, 
offering the Kirchner administration added political leverage 
in the allocation/distribution of such revenues.  On November 
15, Congress approved the extension of the FTT through the 
end of 2007.  End Note). 
 
Expenditures: Increase Driven By Social Expenditures 
--------------------------------------------- ------- 
11. (SBU) The GoA budgets 2007 expenditures at ARP 121.3 
billion ($39.1 billion, or a 15% nominal and 8% real increase 
over 2006), equivalent to 17% of GDP.  The GoA prioritizes 
expenditures on social security, education, science and 
technology, and economic and social infrastructure with the 
overall goal of generating improved income distribution. 
 
12. (SBU) The highest year-over-year increase is spending on 
social services -- ARP 78 billion (approx. $25 billion, or an 
18% nominal increase over 2006), equivalent to 11% of GDP and 
64% of total expenditures.  This includes a 13% increase for 
pensions in 2007, on top of the 11% increase in 2006, and the 
60% increase in unemployment benefits (up from ARP 250 to ARP 
400 per month).  The bill allows the GoA to increase pensions 
further in 2007, as long as excess funds are available. 
(Note:  The Argentine Supreme Court mandated a minimum 13% 
pension increase in a 2006 ruling.  End Note). 
 
13. (SBU) Education, science and technology expenditures are 
forecast to increase ARP 1.6 billion (17% nominal) to ARP 
10.7 billion.  This increase is consistent with the GoA's 
Education Financing Law, which calls for annual federal 
(0.5%) and provincial (0.2%) spending increases through 2010 
in order to bring total education expenditure to 6% of GDP. 
 
14. (SBU) Infrastructure spending is comprised mainly (83%) 
of transportation (ARP 6.1 billion, or almost $2 billion) and 
energy (ARP 5.6 billion, or $1.8 billion) subsidies to the 
private sector, to keep energy and public transportation 
prices unchanged and control inflation.  As noted above, the 
opposition and local press have criticized the government for 
the increases in such expenditures and also for the less than 
transparent way that such funds have been disbursed in the 
past. 
 
15. (SBU) Interest payments are estimated to increase from 
ARP 12.7 billion to ARP 14.1 billion, or 2% of GDP in 2007. 
Interest payments on peso-denominated debt (including 
guaranteed loans, Bodens, Bocones, and restructured debt) are 
ARP 5 billion.  Payments on foreign currency debt (USD 
Bodens, restructured debt, and payments to IFIs) are ARP 8.8 
billion.  (Note:  In 2007, the GoA will pay approximately 
$650 million in interest on debt included in the 2005 
sovereign debt exchange.  Post roughly estimates that the GoA 
would have paid an additional $230 million/year to holdouts 
from the debt exchange, had they accepted the same deal in 
2005.  This debt represents a potential contingent liability 
if/when the GoA eventually reaches an accommodation with 
holdouts.  End Note) 
 
Fiscal Balance: Positive But Decreasing 
--------------------------------------- 
16. (SBU) The 2007 federal government primary fiscal surplus 
(revenues less expenditures, excluding interest and principal 
payments on debt) is forecasted at ARP 21 billion (approx. 
$6.8 billion) or 3.03% of GDP, close to the 2006 forecast of 
3% included in the 2006 budget.  The consolidated federal 
primary fiscal surplus - adding in fiduciary trusts and 
social security, but excluding provinces - is projected to 
fall to 3.15% of GDP from 3.26% in 2006.  The projected 
overall balance for the consolidated federal government 
 
 
totals ARP 7.1 billion (approx. $2.3 billion or 1% of GDP, 
compared to 1.15% in 2006). 
 
17. (SBU) The Budget bill does not include a breakdown of 
individual provincial finances.  However, it notes that the 
provincial primary fiscal balance will be "slightly 
positive."  The consolidated public sector primary surplus, 
including provinces, will remain at 3.15% of GDP in 2007 
under the budget's best case scenario that provinces have a 
neutral primary fiscal surplus.  However, the consolidated 
public sector primary surplus (including provinces) would 
drop to 3.03% of GDP if the Provinces end 2007 with a 
0.1%/GDP deficit, as most private consultants forecast. 
(Note:  This expected provincial deficit is primarily due to 
Buenos Aires Province's projected deficit, which the province 
plans to finance partially via an international bond issuance 
and partially via borrowings from the federal government. 
End Note). 
 
Financing: GoA Relying Primarily On New Debt Issuance 
--------------------------------------------- -------- 
18. (SBU) The GoA's 2007 financing needs total ARP 73 billion 
($23.5 billion), including ARP 57 billion in debt 
amortization and ARP 16 billion in "financial investment" 
(i.e., lending to provinces for project and deficit finance). 
 The GoA will finance these needs via: 
 
- ARP  7.2 billion from the federal fiscal surplus; 
- ARP 23.5 billion in new debt issuance; 
- ARP  7.0 billion in IFI financing; 
- ARP 20.4 billion in BCRA financing; 
- ARP  9.0 billion domestic demand for GoA debt; and 
- ARP  4.8 billion loan repayments (mainly from Provinces). 
 
19. (SBU) Central Bank (BCRA) net financing totals ARP 2.1 
billion as a result of ARP 20.4 billion financing and ARP 
18.3 billion GoA repayment of short-term BCRA financing.  The 
Budget assumes the IDB and World Bank will reduce their net 
exposure, providing ARP 7 billion total financing, with 
scheduled GoA repayments of ARP 4.3 billion to the Bank and 
ARP 3.3 billion to the IDB. 
 
Province Debt Renegotiation: Tool To Gain Political Support 
--------------------------------------------- --- 
20. (SBU) The 2007 Budget allows the Ministry of Economy to 
modify (restructure) the financial conditions of provincial 
debt owed to the federal government, although it lacks 
details on the terms and conditions of the restructurings. 
This is a key provision for the GOA during an election year, 
as the Provinces are beginning to face financial difficulties 
and this is one way to gain their favor.  According to local 
think tank, "Economia y Regiones," provincial debt available 
for restructuring totals ARP 6 billion (almost $2 billion, or 
10% of total provincial debt to the GoA). 
 
Comment 
------- 
21. (SBU) The 2007 Budget has clearly been designed to 
support the Kirchner administration's re-election bid next 
October.  The positive (forecasted) fiscal balance and 
increased social expenditures, transfers, and subsidies to 
the private sector (in order to keep energy and 
transportation prices low and control inflation), all serve 
to win voter support for the GoA.  The Budget's 
underestimation of GDP growth will likely result in ARP 8 - 
12 billion extra revenue, and the "Superpowers" law will 
allow the GoA to use this available cash to target social and 
infrastructure expenditures to woo particular constituencies. 
 End Comment. 
WAYNE