RETURN      TO      SE  ORTEEXCLUSIVERSRCE
REPORTS                                             STRICTED
WITHS  D1      OF THE GOVERNMENT OF          Report No. WH-204b
WITH IN            I06F        8
ONE                          -------
This report is for official use only by the Bank Group and specifically authorized organizations
or persons. It mnay not be published. quoted or cited without Bank Group ar  orization. The
Bank Group does not accept responsibilty for the accuracy or completeness of the report.
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
INTERNATIONAL FINANCE CORPORATION
CURRENT ECONOMIC POSITION
AND PROSPECTS
OF
ARGENTINA
June 18, 1971
South America Department



CURRENCY EQUIVALENTS
Currency Unit       =       New  Pesos ($a )
US$1                =       $a 4.20
US$1 million                $a 4.20 million
$a 1 million                US$238,905
Throughout this report an exchange rate of
$a 3.50   US$1 (which was the prevailing rate
in 1969) was used for purposes of expressing
data in constant prices.



TABLE OF CONTENTS
Page
MAP
BASIC DATA
SUMMARY AND CONCLUSIONS
I.  RECENT TRENDS:  STABILIZATION AND GROWTH                          1
Stabilization Effort 1967-69                                      1
Economic Problems of 1970                                         2
Economic Budget for 1971 and Financial Reform                     4
II.  DEVELOPMENT PROBLEMS AND STRATEGY                                 7
Agricultural Policy                                               7
Industrial Policy                                                 9
Public Finances and Inflation                                    12
Balance of Payments                                              13
Development Strategy                                             13
III.  SECTORAL ISSUES AND PROGRAMS                                     17
Agriculture                                                      17
Industry                                                         23
Electricity                                                      28
Fuels                                                            31
Transportation                                                   32
Communications                                                   37
Water and Sanitation                                             38
Education and Housing                                            40
Conclusions                                                      42
IV.  FINANCING OF PUBLIC INVESTMENT PROGRAM                           43
Public Finances                                                  43
Tax Administration                                            45
Finances of State Economic Enterprises                        45
Financing of Public Investment                                   46
Revenue Prospect 3                                            46
Current Expenditures                                         48
Public Sector Savings                                        49
Financing Plan                                               50



TABLE OF CONTENTS (Continued)
Page
V. BALANCE OF PAYMENTS                                               55
Past Experience                                                  55
Current Account                                               55
Exports                                                       55
Imports                                                       57
Capital Account                                               58
Prospects                                                        59
Export Growth                                                 59
Import Requirements                                           60
Current Account Gap                                          fs2
External Capital Requirements                                 62
External Debt Management                                      64
External Capital Requirements and Growth                      65
APPENDIX: The Beef Problem, 1970/71 and Outlook
STATISTICAL APPENDIX
This report is based on the findings of an economic mission to Argentina
in April/June 1970 composed of Messrs. Murray Ross (Chief of Mission) and
Harold Pilvin (Deputy Chief of Mission), Professor Geoffrey Maynard (Eco-
nomist - Consultant), Professor William Vickrey (Urban Planning Economist -
Consultant), Messrs. Nicholas G. Carter (Quantitative Planning Economist),
Carlos Quijano (Economist), Arthur H. Whitfield (Public Finances - Consultant),
Frants Sporon-Fiedler (Investment Program Coordinator), Syed A. Moini (Invest-
ment Program Adviser), Lorne T. Sonley (Agricultural Economist), D.N.S. Evans
(Agricultural Credit - Consultant), Neil T. Houston (Transport Economist -
Consultant), Alexander Nowicki (Industrial Economist), Antonio S. Tarnawiecki
(Industrial Policy Specialist), Thomas Berrie (Power Economist), Huro Yamaoka
(Assistant Power Economist), John H. Hurlebaus (Sanitation Economist), Rafael
Sandoval (Sanitary Engineer - Consultant), Giulio Fossi (Planning Specialist),
Mrs. Nubia L. Halaby (Mission Secretary), Mrs. Iris A. Patty (Mission
Secretary). Miss Elinor Yudin and Mr. Surinder Malik contributed to the
preparation of the report. Updating missions visited Argentina in December 1970
and January 1971.



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BASIC DATA
Area:                                             2.85 million km2
Density per km2                                 8.2
Population (1970):                                23.4 million
Rate of growth per annum (1960-70)              1.6 percent
1968      1969      1970
Gross National Product, Current Prices
(million new pesos):                            60,893    69,313    82,567
Per capita (US $ 1969 prices)                      819       860       889
Real growth of GNP (percent)                       4.8       6.6       4.9
Percent of GNP at Constant 1969 Prices:
Gross investment                                  20.5      22.6      23.1
Gross domestic savings                            21.3      22.3      23.0
Resource gap                                      -o.8       0.3       0.1
Factor income payments                             1.2       1.1       1.0
Net foreign capital inflow                         2.0       0.8       0.9
Central Government revenues                       18.5      18.4      18.5
Gross Domestic Product at Factor Cost
Constant Prices (million new pesos):
Sectoral origin (percent):
Agriculture                                    1h.4      14.5      14.8
Mining                                          1.8       1.8       1.8
Manufacturing                                  31.0      30.7      35.7
Construction                                    5.6       6.2       5.2
Transport and communication                     9.8       9.6       7.3
Commerce                                       13.3      13.8      16.7
Banking                                         4.5      lh.5       3.9
Government and other services                  19.6      18.9      14.6
Money Supply:
Change in percent                                 26.8      10.3      1l.l_
Price Movements (Percent):
GDP deflator                                      11.9       6.7      13.5
Wholesale price                                    9.6       6.5      11.2/b
Cost of living                                    16.2       7.6      13.6



1968      1969      1970
Public Sector Finances
(million of 1969 new pesos):
Current revenue of Central Government
as percent of GNP                              18.0      17.7      18.1
Current revenues of Centra:l Government        11,708    12,253    13,140
Current expenditures of Central
Government                                    9,515    10,129    10,418
Current account surplus of Central
Government                                    2,193     2,124     2,722
Percentage change over previous year           -7.0      -3.2      28.2
Current account surplus of state
enterprises                                   1,136     1,160     1,154
Current account surplus of provincial
governments                                   1,482       943     1,433
Financial investment                              895     314.0       456
Balance of Payments (US $ million):
Exports of goods and services                 1,740.6   1,999.0   2,192.0
Imports of goods anld services                1,613.6   2,058.9   2,209.5
Current account deficit (+ = surplus)          - 81.9    -285.2    -235.1
Change in percent                              -189.6    -248.2      17.6
Medium and long-term loans                     - 79.1      21.0      90.3
Of which:  Public and publ-icly guaranteed    (-104.6)     (7.2)    (38.4)
Private sector                       (25.5)    (13.8)    (51.9)
Direct private investment (net)                   7.0      13.0      11.0
Short-term and other capital (net)              208.3    - 16.8     310.8
Capital account balance                         136.2      17.2     412.1
Errors and omissions                              3.0       8.1       8.o
Net change in reserves                          149.1    - 80.0     296.5
Total reserves at end of period                 427.7     347.7     644.2
Medium and Long-term External Public Debt:
(US $ million)
Total outstanding (end of period)             2,201.6   2,323.5   2,247.0
Of which:  Undisbursed                          423.3     535.3     507.5
Annual debt service                             483       487       461
Debt service ratio (percent)                     27.7      24.4      21.0
Net IMF Posit.ion (US $ million):                  96.6     117.8     130.2
Quota                                           350       350       440
Drawings Outstanding                             -         -         -
Relationship to Monetary or Customs Area:          Member, LAFTA
/a Twelve months ending Jume 1970.
/ Twelve months ending October 1970.



SUMMARY AND CONCLUSIONS
1.        The challenge facing those who are managing the Argentine economy
today is to follow policies which will result in sustained economic growth,
will permit rising real incomes to the working population, and will con-
solidate the many improvements in economic and financial management made
during the past several years, when the Argentine economy registered sub-
stantial gains.  Between 1967 and 1970 the annual increase ':L gross product
averaged about 5.5 percent, unemployment declined considerably, the effi-
ciency of public administration was appreciably raised, fiscal performance
improved notably and the rate of inflation was greatly reduced. At the
same time, exports increased substantially and became more diversified,
while advances in industrial efficiency took place. The combined effect
of these accomplishments helped to improve the country's international
credit standing and made it possible for Argentina to re-enter foreign
capital markets through the placement of bonds on reasonably favorable terms.
2.        However, in mid-1970 signs of inflation re-appeared, investor con-
fidence weakened, and investment and the rate of growth slackened off. Led
by a dramatic increase in beef prices, the cost of living rose by 22 percent
between December 1969 and December 1970 and 11 percent in the first quarter
of 1971. Collective bargaining negotiations now being completed between
management and unions will probably result in wage increases averaging 25
to 30 percent, so that the rate of inflation in 1971 is likely to equal or
exceed that of 1970. Moreover, a poor wheat harvest and disappointing meat
exports in the first months of the year raised concern over the balance of
payments for 1971. In the light of these developments, the Government is
now faced with the need for revising the assu,P, ions made about prices,
wages and exports at the beginning of 1971, ri n it formulated its economic,
financial and monetary budget for the year.
3.        One important step has already been tal-Rn: recognizing that in-
flation will not be brought under control immeulately, the Government has
adopted a flexible exchange rate policy designed to  .:-_ect the balance of
payments and promote the flow of exports which is crucial to economic growth.
Exchange adjustment, if it is to give maximum incentives to exports, will in
the course of time have to compensate for a substantial element of past
domestic price increases, as well as possible current increases.   It remains
to be seen whether, in formulating its revised economic budget, the Govern-
ment will limit the size of the fiscal deficit to be financed through the
banking system to a magnitude consistent with the overall growth of the
money supply under an appropriately revised set of assumptions, including an
adequate expansion of credit to the private sector. The problem of limiting
the size of the public sector deficit for 1971 ,Was heightened because of an
increased rate of inflation, which tends to d*press public savings in
Argentina, and as a consequence of substantial increases in the salaries of
public sector employees.  Unless the rise of publlc expenditures could be
limited or new sources of revenue found, there is the danger of a large in-
crease in resort to bank-financing of public expenditures. If this were to
occur, considerable demand-induced inflation would be added to the cost/push
inflation already under way.



4.        The Argentine economy, rich in material and human resources, is
capable of growing at a satisfactory rate.   It should be quite possible for
the country to continue the 5.5 percent growthl rate over the next several
years, and subsequently to increase it, in the context of suitable policies
affecting the key agricultural and industrial sectors, concentrating on the
improvement of producer incentives, the reduction of costs and the accelera-
tion in the growth of exports. A satisfactory growth rate will also be
greatly facilitated by the continuation of the efforts to improve fiscal and
monetary management which proved so successful over the 1967-70 period, in
order to sustain high rates of domestic saving and investment.
5.        The principal condition for expanding Argentina's export earnings
in the next few years is the adoption of measures to increase the exnortable
supply of beef and feed grains. The Government recognizes that in the long
run the measures through which this can be accomplished include maintenance
of terms of trade for the agricultural sector that give adequate incentives
to investment and production, higher returns from exports than from domestic
sales, the replacement of export taxes with other revenue measures and steps
to reduce the prices of industrial products used by agriculture. In the
near term, the Government is seeking to obtain additional supplies of meat
for the export market by restricting sales in the domestic market and en-
couraging consumption of beef substitutes. The problem of increasing pro-
duction and exports of beef as well as of other agricultural products over
the longer term is predicated on convincing the rural sector that there will
be continuity in Government policy, so that they will possess sufficient
confidence to make the necessary investments to increase agricultural output.
At the same time, the Government intends to encourage more productive use of
land by increased public investments in the sector, which in the past have
been relatively low. These include the construction of modern storage fa-
cilities, farm-to-market-roads and rural amenities, as well as programs to
eliminate foot and mouth disease, to increase the supply of medium- and long-
term farm development credit and to intensify middle-level technical agri-
cultural education.
6.        Policies leading to the reduction of the present price level of
manufactures in Argentina would have numerous advantages. In themselves,
they would lead to an increase in living standards. Lower prices for man-
ufactured consumer goods would encourage a shift in consumption away from
foodstuffs, making possible increased exports, while reduced prices of
manufactured inputs would serve to stimulate agricultural output and exports.
Finally, lower industrial prices would greatly facilitate the Government's
objective of obtaining a strong expansion in industrial exports, reinforcing
the measures recently taken to provide tax rebates on exports and export
credit. The policies directed toward these objectives would include rein-
troduction of the progressive lowering of tariffs on industrial goods. In-
creased exports of manufactures could also be facilitated through encourage-
ment to industrial firms to reach agreements with for'ign companies in order
to increase the extent of specialization. Rapid increases in exports of
products based on domestic resources such as processed foods, clothing and
leather goods deserve special consideration and active support.



7.        Along with policies to increase productivity in agriculture and
industry and to expand export earnings, an increase in the rate of capital
formation would also accelerate Argentina's economic growth rate. A higher
level of public sector savings and its effective allocation and application
would facilitate the continuation of the recent growth momentum. In the
absence of an increased saving propensity on the part of the private sector,
continuation of the growth rate of 5.5 percent annually will depend on a
continually improving public sector saving effort--from $a 4.2 billion
(1969 prices) in 1969 to an average of $a 6.0 billion during 1971-75--and
on continuing to increase the efficiency of resource utilization by the
public sector.
8.        Because this growth objective will also require a rapidly growing
supply of imports, export earnings will have to grow by at least 6 percent
annually. In addition, a substantial inflow of capital will be needed from
abroad: to realize this inflow, a concerted effort will be needed to improve
the Government's capacity to prepare high priority public investment projects
suitable for external financing, and to secure external capital on reasonably
favorable terms by carrying out economic policies which will assure a high
degree of creditworthiness.
9.        A significant increase in export earnings in the next several
years should be possible, assuming that the Government implements its
announced determination to follow realistic exchange rate policies, to pro-
vide adequate export incentives and to accomplish the necessary shifts in
the pattern of Argentine consumption. Most of the increase in export earn-
ings over the near term is expected to be generated by beef and feed grains,
although significant contributions should also zome from export of fruits
and manufactures.
10.       On the assumption that the Government succeeds in increasing ex-
port earnings, the financing of the level of imports needed to achieve a
5.5 percent growth rate, while meeting other c"-; ms on foreign exchange,
will require a gross capital inflow in 1971-75 of USA7('5 million a year.
Of this total, US$450 million will be needed to finance external debt amor-
tization and US$295 million the current account deficit. In recent years,
Argentina has obtained more long-term loans than in the past, and thereby
has improved the maturity structure of her external debt. The structure is
still highly unfavorable, however, with the weighted average maturity of
the outstanding external debt approximately six to seven eyars. In order
to continue in this direction, it will be necessary to shift a large pro-
portion of public sector borrowing from suppliers' credits and commercial
bank loans to long-terms loans. This implies that a strict watch will be
kept on the terms on which Government agencies and the private sector borrow
abroad.
11.       While the debt service ratio has fallen in recent years (total debt
service ratio from 33 to 27 percent and public debt service ratio from 27 to
24 percent between 1967 and 1969) additional improvement would further



- iv -
strengthen Argentina's creditworthiness and improve the prospects of obtain-
ing more favorable terms of external borrowing.   A reduction of tlle public
debt service ratio to around 17 percent in 1975 appears attainable if
Argentina succeeds in increasing exports and improving the average terms of
new borrowing to the extent assumed in this report to be feasible. Even
this level of debt service is quite high. However, it should not become
unmanageable (as was the case oni several past occasions when rescheduling
was necessary) if the Government succeeds in sustaining the growth of the
economy and avoiding the stop-go episodes of the past. It is furthermore
important that to the extent inflation is not contained to a rate no higher
than that of Argentina's principal trading partners, exchange rate policies
are followed which ensure the growth of exports and avoid sharp balance of
payments fluctuations.



I. RECENT TRENDS: STABILIZATION AND GROWTH
1.        The Argentine economy registered substantial gains in the economic
and financial spheres during the past several years. Between 1967 and 1970
the annual increase in GDP averaged some 5.5 percent, unemployment declined
considerably, the efficiency of public administration was raised notably,
fiscal performance improved appreciably and inflation was greatly decelerated.
At the same time, exports increased subtantially and became more diversified,
while some advances in industrial efficiency took place. The combined effect
of these accomplishments helped to improve Argentina's international credit
standing and made it possible for Argentina to re-enter the world's capital
markets through the placement of bonds abroad on reasonably favorable terms.
However, evidence of resurgent inflation appeared last year and the challenge
facing the Argentine economy today is to implement policies which will result
in sustained economic growth while preserving and improving the many gains
in economic and financial management made during the past several years.
A. Stabilization Effort: 1967-69
2.        The Government's policy for arresting inflation -- and thereby
attempting to recreate an economic environment not dominated by continuous
inflationary expectations -- consisted in recent years of the following
main elements which were adopted beginning in 1967: a massive devaluation
aimed principally at restoring confidence in the external value of the
peso; imposition of heavy export taxes and reductions in import duties
aimed at minimizing the effects of devaluation on internal prices; prog-
ressive curtailment in the Treasury deficit; a strong incomes policy; and
a sound monetary and credit policy designed to stimulate the private
sector.
3.        The recent stabilization effort had    asiderable success.  The
combination of wage, monetary, credit and fiscal policies succeeded in
reducing the rate of inflation from around 30 pe    nt in 1966 to less
than 10 percent in 1969. Moreover, disinflation was not accompanied by
recession as in previous stabilization efforts. On the contrary, output
rose impressively by an annual average of 5.5 percent from 1967 to 1970.
While a number of decisive and coordinated Government policy measures con-
tributed to the improved economic performance between 1967 and 1969, the
Government's task was greatly facilitated by a number of factors. Among
these were a favorable balance of payments position in 1965-66, just prior
to introduction of the stabilization program, and excellent harvests in
1969 and 1970. A key objective of the devaluation of 40 percent in March
1967 was to restore confidence in the external value of the currency and
thereby encourage both the repatriation of Argentine capital and an inflow
of new capital from abroad. The main element in the stabilization program
was the Government's firm incomes policy aimed at restraining increases in
money wages and prices. While the rate of inflation declined sharply, the
level of real wages appears to have risen somewhat on the average. The
quantitative aspects of the main policy components of the stabilization
strategy are summarized in Table 6.10 of the Statistical Appendix.



4.        The period 1967-70 was also notable for a substantial improve-
ment in Treasury financial operations in respect to both the fiscal deficit
and its means of financing. By increasing revenues and checking the growth
of expenditures, the Government succeeded in reducing the deficit from 33
percent of total expenditures in 1966 to about 12 percent in 1969. The
devaluation made possible the introduction of substantial export taxes which
contributed greatly to the improved fiscal performance. In current pesos,
the size of the deficit was smaller in 1969 than in 1966. Less success
was achieved in financing the deficit outside the banking system but it
appears that a good deal more than half was financed fron non-bank sources.
In 1969 in particular, Argentina succeeded in raising significant amounts
of finance by selling bonds both abroad and at home.
5.        An outstanding feature of the stabilization policy was the ex-
pansionary credit policy pursued with respect to the private sector. As
a result of the improvement in the fiscal position, an increasing propor-
tion of growth in the money supply was directed towards the private sector.
The liberal credit policy was facilitated, as noted earlier, by the existence
of a favorable balance of payments position in 1966. The production res-
ponse by the private sector to this credit expansion, combined with a
vigorous demand for its output by the Government and general public, was
most favorable. Unfortunately, the social disturbances during 1969 engen-
dered a crisis in confidence and the ample liquidity of the private sector
contributed to the large outflow of short-term capital across the exchanges.
B. Economic Problems of 1970
6.        Economic and financial management during 1970 was rendered diffi-
cult by a number of factors, chief among which were the weakening of the
incomes policy following the social disturbances of 1969, the setting-in
of the low point in the livestock cycle and the political uncertainties
surrounding the change in the presidency. The problem of formulating an
appropriate economic policy for 1970 was further complicated by the need
to pay more attention to aggregate demand. The existence of considerable
excess capacity in industry in 1966 made it possible for short-term stabili-
zation measures during 1966-69 to concentrate mainly on checking the rise in
costs, particularly wage costs, and increasing the liquidity of the private
sector. This was less true in 1970 when both demand and cost increases
threatened price stability. Since 1966, a strong rise in gross domestic
product brought the economy nearer to full employment. Within industry
the situation was by no means uniform: some industries were undoubtedly
working at or near maximum capacity while others still had considerable
unutilized capacity.
7.        Besides maintaining the growth of the economy and keeping the
rate of inflation at its 1969 level, the Government which left office in
June 1970 had two other short-term objectives for 1970: first, an improve-
ment in the current balance of payments and a rise in foreign exchange
reserves and, second, some rise in labor's share of national income. Against
this background the Government forecast a rise of 6.3 percent in GDP as



-3-
compared with 6.6 percent in 1969. Agricultural output was expected to
grow at 6.5 percent, but in line with capacity indications, manufacturing
and other output was expected to rise at a somewhat slower rate than GDP.
With imports expected to remain at their high 1969 level, aggregate supply
(GDP and imports) was expected to increase by only 5.5 percent. On the
demand side, public sector investment and exports were expected to show
the largest proportionate increases with the rate of growth of private
investment showing a decline.
8.        Monetary, credit and fiscal policy for 1970 was framed appro-
priately, the main objective being an expansion of money and credit con-
sistent with a substantial growth of output while at the same time keeping
the increase in prices to the 1969 rate. A major assumption underlying
the policy was that no further significant wage increases would be con-
ceded and that no change in the exchange rate would be necessary. Thus,
the Government programmed an increase in money supply of about 13.6 per-
cent, slightly less than the anticipated increase in GDP in current prices,
14.8 percent. Credit to the private sector was expected to rise by about
12.6 percent. The Treasury budget estimates showed a further drop in the
absolute size of the deficit. As a proportion of expenditures the deficit
was expected to fall from 12 to 11 percent.
9.        Implementation of the economic budget for 1970 was severely
strained by the emerging weakness in incomes policy during the second
half of 1969 and the first half of 1970. The growth in effective demand
due to substantial increases in real wages in 1969-70 and a drastically
reduced supply of beef 1/ caused the cost of living to rise well above the
Government objective of restraining price increases to the previous year's
rate of about 7 percent. The change in the presidency in mid-1970 further
aggravated the strains. The peso was devalued in June by some 14 percent,
from 3.5 to 4.0 to the dollar and although the authorities sought to offset
its impact on domestic costs and prices by compensating increases in export
taxes and reductions in import duties, rising infintionary pressures could
not be contained. Strong contributing factors were the persistent scarcity
of beef and the continuing weak incomes policy.   The n_ zconomic team which
took office late in the year was confronted by lack of investor confidence
which dampened economic activity, resurgent inflation, and a deteriorating
balance of payments situation. The decline in beef supply was a major
depressing factor and one of the Government's first acts was the virtual
abolition of export taxes on beef. Although the new economic team declared
its intention to restrain inflation, prices continued to increase and the
cost of living rose from end-December 1969 to end-December 1970 by 22 percent
or by an average of 13.5 percent. The 5 percent growth in GNP in 1970 was
below the target. The increase, which took place largely in the first half
of the year, was largely due to increased public sector investment and export
growth and may be regarded as satisfactory given the political instability
and uncertainty it engendered in the private sector. The resurgence of
inflation was primarily due to cost-push elements, especially rising beef
1/   For details see Appendix on the Beef Problem 1970/71 and Outlook.



-4-
prices because of the decline in supply, rising world prices for beef and
the effects on costs of wage escalations. The inflationary effects of
monetary and fiscal policies, or even of tile currency devaluation, appear
to have been minimal since all the three economic teams of 19iO adhered to
a set of basically sound guidelines in these areas.
C. Economic Budget for 1971 and
Financial Reform
10.       The economic budget for 1971 was formulated with the objective
of accelerating economic growth through stepped up public investment
activity while reducing inflation. The economic team which took office
late in 1970 prepared a reasonably consistent fiscal, monetary and credit
program for 1971. The program was based on the assumption of a 6.2 per-
cent increase in GNP, a wage policy which would contain increases up to
16 percent and a deceleration of price inflation to 10 percent. A major
effort was envisaged in the fiscal field encompassing new taxes, including
a diesel fuel tax, improved tax administration and improved expenditure
controls. Although the program called for deficit financing by the bank-
ing system in the magnitude of 1.4 percent of GDP as against 1.1 percent
the previous year, it was consistent with overall monetary expansion and
adequate credit availabilities to the private sector to support wage in-
creases of 16 percent and real GDP growth of roughly 6.2 percent. The
authorities recognized that the achievement of the fiscal target would
require a concerted effort to restrain the growth of expenditures, especial-
ly investment expenditure. In addition, it was recognized that the balance
of payments in 1971 could present some difficulties because of a drop in
beef availabilities. However, the authorities believed that the expected
bumper harvest of feedgrains, coupled with restrictions on domestic beef
consumption, would serve to maintain a high level of exports. Moreover,
the program envisaged improved management of the balance of payments
through the adoption of a fLexible exchange rate that could compensate for
domestic inflationary pressures.
11.       The economic situation in the first quarter of 1971, far from
improving, continued to deteriorate and made it extremely doubtful that
the Government's economic objectives for the year could be achieved. Thus,
the cost of living index increased by about 11 percent in the first quarter
and it became apparent that the collective bargaining negotiations between
management and unions which began in February could well result in general
increases on the order of 25 to 30 percent. Under these circumstances, it
is doubtful that the inflation in the twelve months ending December 1971
will fall below that of the preceding year. Moreover, the export experience
of the first two months did not lessen the concern over the balance of
payments for 1971. As the high rate of inflation combined with doubts con-
cerning the direction of the Government's economic policy persisted and the
peso came under considerable pressure in the first quarter of the year.



- 5 -
Confronted with this situation the Government took a positive step in April
1971 and instituted a flexible exchange rate policy.   However, the peso was
devalued by only 5 percent between April and June 1971.
12.       It is clear that a substantially revised economic budget for
1971 will have to be formulated which will need to take account of the prob-
ability of a lower rate of real growth, a considerably higher rate of infla-
tion and a less favorable balance of payments outcome than earlier contem-
plated. The problem of limiting the size of the public sector deficit for
1971 was heightened because of an increased rate of inflation, which tends
to depress public savings in Argentina, and as a consequence of substantial
increases in the salaries of public sector employees. Unless the rise of
public expenditures could be limited or new sources of revenue found, there
is the danger of a large increase in resort to bank-financing of public ex-
penditures. If this were to occur, considerable demand-induced inflation
would be added to the cost/push inflation already under way. It remains
to be seen whether, in formulating its revised economic budget, the Govern-
ment will limit the size of the public sector deficit to be financed through
the banking system to a magnitude consistent with the overall growth of the
money supply under an appropriately revised set of assumptions and ensure
that the program allows for an adequate expansion of credit to the private
sector. In the light of the breakdown of stabilization, the new program
will have to take full cognizance of the need to protect the balance of
payments through the maintenance of a flexible exchange rate policy that
will compensate for the very substantial increase in prices that has al-
ready taken place, as well as the continuing increase in prices that seems
inevitable in 1971 as a consequence of the expected large upward adjustment
in money wages.
13.       Persistent inflation has had a most unfavorable effect on the
capital market. The economic team which took office in late 1970 addressed
itself to the problem of reconstituting the country's capital markets. As
a result of inflation an extra-banking system de-<oped outside the regula-
tion of the Central Bank and through which substantial liquid resources
flowed at interest rates substantially above the regulated official rates;
the housing mortgage market shrunk; many savers became reluctant to place
their savings on deposit in the regulated savings institutions.
14.       The principal measures adopted by the Government included an
increase in official interest rate ceilings and the creation of an account
in all banking institutions in which interest rates would freely respond
to market forces, with the funds in these accounts to be placed on deposit
and lent for specified minimum periods (one year on time deposits and loan
maturities of at least 2-1/2 years). A deposit guarantee fund was created
with the purpose of providing savers with the assurance of security of
their deposits. In order to help solve the acute shortage of housing
finance, banks are required to reserve a significant minimum proportion
of new loans to home buyers. In order to acquire control over the extra-
banking, high interest acceptance market which has grown rapidly in recent
years, the Central Bank adopted controls (through registration and report-
ing) over this market.



-6-
15.       The principal objectives of these measures were to increase the
volume of savings channeled through institutions under the control of the
Central Bank; to provide a structure of interest rates more fully respon-
sive to free market forces and therefore conducive to an improved alloca-
tion of resources, and to achieve also such objectives of the new Govern-
ment as an increase in finance available to low-income home buyers and in
the proportion of bank liquidity made available to national (as distinct
from foreign) enterprises.
16.       In the past, Argentina's growth momentum has frequently been
interrupted by the syndrome of large public finance deficits, rapid in-
flation and expansion of the money supply, and exchange rate overvalua-
tion followed by restrictive policies which have included sharp curtail-
ments of credit to the private sector resulting in economic stagnation.
In order to avoid the recurrence of this process in the future it would be
useful to adopt appropriate fiscal, monetary, credit and incomes policies
along the lines discussed above.



- 7 -
II. DEVELOPMENT PROBLEMS AND STRATEGY
17.       To fully grasp the meaning of the recent stabilization effort
and its impact on economic growth, it must be viewed within the context
of Argentine development problems and strategy during the past several
decades. Between 1950 and 1967 Argentine economic development was charac-
terized by slow growth and continuous, rapid inflation. Real gross domes-
tic product grew by only 3 percent per annum; the rate of intlation was
seldom below 10 percent, averaged over 25 percent and in one year approached
100 percent; and per capita income increased by only 1.3 percent annually.
There were shorter periods when Argentina managed to maintain much higher
rates of growth: in the mid-1950's real GDP grew at a rate of well over
5 percent per annum for a period of six years. After this, however, periods
of fast growth alternated with major recessions which held back the average
growth rate for the period as a whole. A strong expansion began again in
1964 and, apart from a check in 1966-67, continued into 1970 at: an annual
average rate of around 5 percent. Moreover, the rate of inflation slowed
markedly from 1968 until the first half of 1970.
18.       Argentina is not an underdeveloped country in the accepted sense
of the term. It has a relatively high income per capita of over US$850,
which is based on excellent human and natural resources. Its slow growth
cannot be explained by an inability to save and invest an adequate propor-
tion of national product: the ratio of gross fixed capital formation to
GDP averaged about 18 percent in the 1950's and rose to over 20 percent in
the early 1960's with the help of substantial external capital inflows.
After falling in the mid-1960's it reached 20 percent at the end of the
decade, again with the help of external capital. Although these figures
are somewhat inflated by the relatively high price of capital goods in
Argentina, there seems little doubt that the investment ratio was adequate
to sustain a higher rate of growth than that experienced during the period
up to the mid-1960's.   The explanation of the   t   growth and uneven devel-
opment must therefore be sought elsewhere. Briefly, the explanation can
be found in past policies affecting agriculture, industry, public finances
and price stability, and the balance of payments, especially export devel-
opment.
A. Agricultural Policy
19.       The basic element in Argentina's sluggish economic performance
in the post-World War II period has been the very slow growth of agricul-
tural output until recently. Between 1944-46 and 1954-56 output rose by
only 12 percent. From the mid-1950's to the end of the 1960's, the annual
average growth rate has been slightly more than one percent, or less than
population growth.



- 8 -
20.       The fall in argricultural output in the first postwar decade was
largely the consequence of Government policy aimed at the transfer of wealth
and income from rural to non-rural sectors and at the promotion of indus-
trialization. These policies had an adverse impact on farm production. ane a'
a result, Argentina's share of world exports fell considerably from the 1930's
to the 1960's. The failure of agriculture to grow in line with the rest of
the economy caused balance of payments difficulties. The alternation of ex-
change rate depreciation and accelerated domestic inflation, combined with
frequent changes in export tax policy, produced large short-run fluctuations
in agriculture's terms of trade. By 1960 these terms of trade had returned
to their pre-World War II level and a further strong improvement took place
up to the mid-1960's. Thereafter, the terms of trade deteriorated through
1969.  Although the terms of trade of livestock have recently improved sharply,
it is too early to judge whether the present terms of trade of agriculture as
a whole are adequate to induce the continued expansion of output required for
the growth of the entire economy. However, it is clear that large short-run
fluctuations are inimical to long-term agricultural development: long-term
investments such as in equipment, permanent pasture and on-farm storage
capacity are discouraged.
21.       There is little doubt that periodic shortages in the supply of
exportable agricultural products could be eliminated if appropriate agri-
cultural and industrial policies are followed. Agriculture's terms of
trade need to be stabilized at a favorable level for a long enough period
to restore the necessary confidence and to generate the required investment
and application of improved technology in the farming sector. The problem
remains, however, of reconciling an improvement in agriculture's terms of
trade with reasonable overall price stability: more precisely, of prevent-
ing money wages, and therefore industrial costs and prices, from rising in
line with domestic food prices, particularly beef. In the long-run, it
would be highly desirable to shift the pattern of consumption away from
beef to other foodstuffs and to non-agricultural products.
22.       At the present relatively high level of income, high literacy
rate, an acceptable pattern of income distribution, private consumption
is tipped overly toward food items. Consumption of industrial goods in all
forms accounts for only 30 percent of the family budget, while meat con-
sumption alone reaches 16 percent. Considering that domestic prices of
industrial goods are about 42 percent above prices in developed countries,
and that domestic meat prices are as much as 60 percent below meat prices
in developed countries, consumption of meat considerably outweighs con-
sumption of industrial goods in Argentine family budgets, if both are
measured in international prices. The relationship between high industrial
prices and low agricultural prices is believed to have been largely res-
ponsible for such an unusual consumption structure. High price elasticity
of demand for industrial goods offers the prospect that consumption of
these goods would grow if price structure were to change significantly.
To achieve this, however, industrial prices will have to rise much more
slowly than prices of agricultural goods. Changes in the structure of



-9-
consumption can be introduced only very slowly and over a long period of
time. Meanwhile, medium- and short-term solutions to agricultural problems
are possible and should prove effective.
23.       To increase exports and output over the medium-term -- in this
context, beginning with the second or third year following their intro-
duction -- the following measures might be introduced and advertised
widely: the rebuilding of farmer confidence in the adequacy and fairness
of public policies towards the sector, and in the Government's intention
and capacity to implement and adhere to decisions for reasonably long periods
of time; the permanent elimination of dual pricing in export and domestic
markets by the elimination of export taxes; the introduction, in place of
export taxes of an ad valorem tax per head of cattle at the slaughterhouse
level which leaves the producer with a remunerative price; the effective
administration of the existing progressive land and income taxes to reduce
and ultimately eliminate the profitability of holding land in under-use
rather than making it available to the market; and the administration of
taxes on a uniform basis nationally.
24.       Argentine authorities recognize that eliminating the export tax
is the simplest and most effective route to short-term price adjustments
to make exportation more profitable. The suspension of the export tax in
October 1970 went far in this direction. Permanent elimination of the
frequently substantial taxes could significantly improve the exportability
of important agricultural products.
25.       A second way of increasing export supply is by withholding products
from the domestic consumer or inducing him to eat less beef. These measures
have been tried in the past with only modest success. In 1970, for example,
a program of meatless days in restaurants had very limited success. Like
meatless days, persuading consumers to reduce purchases of readily export-
able farm products is a measure of only moderate promise. In the past,
promotion campaigns have had limited success.
B. Industrial Policy
26.       Substantial industrial development has taken place in the post
World War II period, and a more complex and developed industrial sector
than in most countries with comparable population sizes and per capita
income levels now exists. The share of manufacturing production in total
product was almost one-third in 1968 and the per capita production of indus-
trial products was around US$275, about two-thirds of that in Italy in the
same year. However, the process of industrial development through import
substitution in an environment of protection against imports, has led to
high cost production which in large part resulted in excessive product
differentiation and inability to take advantage of economies of scale.
Because of its high costs, industry is almost entirely domestically oriented,
but even this market has been limited because Argentine consumers appear
not to have been inclined to shift from inexpensive agricultural products



10 -
to purchases of expensive industrial goods.    Expenditures on industrial
goods have accounted for only 30 percent in an average family budget at
the prevailing Argentine prices, or no more than 20 percent in terms of
internationally comparable prices. Only a few industries (sucl as rail-
way cars, calrulators, pharmaceuticals, tires) have been successful in
selling their products abroad. The industries that were expanded or created
were not such as to raise Argentina's export capacity; nor did they signi-
ficantly reduce the demand for imports. Instead, highly capital intensive
oligopolies catering solely to the domestic market have been created behind
high tariff walls, and until very recently these worked well below capacity.
This pattern of industrialization has created relatively little employmetit
in relation to value of output. Inflation has exacerbated the problem of
obtaining industrial financing and is one of the factors which contributed
to the prominent place which subsidiaries of foreign firms occupy iil the
Argentine economy through their access to external sources of capital.
Industrial development has been based to an important extent on such
foreign c-apital.
27.       A significant change in industrial protection policy occurred
with the stabilization program introduced in 1967. The devaluation that
took place that year was accompanied by a reduction in tariffs on non-
agricultural products from an average of 119 percent to 61 percent. How-
ever, the rise in the domestic price level that took place after the
devaluation reduced the competitiveness of domestic industry to a signif-
icant degree. Through another reform adopted in February 1970, tariffs on
all domestically produced capital goods were to be reduced to the 80 percent
level as of June 1970, while tariffs on capital goods not produced in
Argentina were to be fixed at the 20 percent level. The devaluation of June
1970 was only partly compensated for by further cuts in tariffs. In late
1970 tariffs on a large number of industrial products were increased for a
three month period pending preparation of a new tariff policy. A further
step in the direction of increased protection to local industry was taken
at that time with the adoption of a more stringent "Buy Argentine" law than
previously existed.
28.       Industrial output has risen at a rate of 7.5 percent per annum
since 1967, thereby eliminating a good deal of the excess capacity which
existed in 1967 and allowing firms to spread high overhead costs over a
greater volume of sales. Moreover, the agreements reached in 1967 with
the Government to absorb wage increases gave firms the incentive to compete
for shares in the expanding market. Thus price competition became keener
and firms discovered that with total market demand being price elastic
the loss in profit margins per unit could be regained through increasing
the volume of sales and reducing production costs.
29.       Industrial strategy in the future needs to aim at market expan-
sion mainly by stimulating domestic and foreign demand through lower produc-
tion costs and prices. Argentine industry could expand output to meet the
demand for private consumption, for public investment and for export. The
first is largely predicated on a substantial lowering of the level of indus-
trial prices relative to agricultural prices, thereby inducing a shift in the



- 11 -
expenditure pattern of family budgets. Sales of domestically produced capital
goods for public investment would be greatly facilitated if the financial
position of the Government and the state economic enterprises was maintained
on an even keel and provided assurances to industry of a steady market at
reasonable prices. This would be preferable to the erratic investment policy
of the past in which domestic suppliers sought cover under "Buy Argentine"
laws and tried to compensate for the lack of orders by high prices. Argentine
authorities have already moved toward helping domestic industry by making the
purchase plans of the public sector known well in advance and bv making credit
facilities available to local industry. An expanded domestic market for
industrial products through greater efficiency and lower prices would also
contribute to an expansion of exports.
30.       Moreover, export markets will become easier to penetrate if a
part of Argentine industry starts specializing for export. Argentina exports
at present only 3.2 percent of its industrial output excluding processed foods
and there are many fields in which Argentine industries could become inter-
nationally successful, especially in products relying on domestically pro-
duced inputs and those using underutilized modern equipment. This contrasts
sharply with further possibilities for import substitution, considering that
Argentina has already attained a very high degree of import substitution and
at present only 6.5 percent of its demand for final industrial goods and 25
percent of its industrial inputs are supplied from imports. In relative terms,
i.e., compared to their income per head, Spain and Italy depend almost twice
as much on industrial imports as Argentina but contrary to Argentina they
compensate this dependence by the exports of manufactures. Given the limited
size of the Argentine domestic market, further efforts at increased self-
sufficiency of industrial production would carry the manufacturing sector
further away from the specialization and benefits from economies of scale,
while production for increased export would, on the contrary, contribute to
increased efficiency.
31.       Argentine authorities recognize that the requirements for a
vigorous growth of Argentine industry include botit a more balanced and a
more stable growth of the economy as well as the adopt-';- of industrial
policies conducive to increased productive efficiency. A successful
stabilization policy would help create conditions under which both inidus-
trialists and workers would have a greater interest in increasing produc-
tivity. An appropriate import tariff policy would promote greater competi-
tion from imports and lead to specialization in lines of production in which
Argentina has an obvious comparati're advantage. This would increase the
reliance on foreign trade and contribute in the future to avoidance of invest-
ment in industries where capital requirements and returns to scale are large,
but the factor endowment is inadequate and both market capacity and opportun-
ities to export too small to warrant domestic manufacturing. An appropriate
financial policy would support mergers among smaller industrial enterprises
and remove support from non-viable units, leading to a gradual elimination of
sub-optimal industrial units and reduction of average production costs. It
would also help to reduce differences in efficiency among firms within the
same industries, which are at present very considerable in Argentina and are
instrumental in keeping the sales prices high. Labor productivity in most
efficient firms now ranges from twice that of the least efficient firms in



- 12 -
textiles and metal manufactures to seven times thiat of the least efficient
in the rubber and cement industries.
C. Public Finances and Inflation
32.       Public finance was another victim of immediate post World War II
policies and of the inflation to which they gave rise. In later years, it
contributed strongly to the continuation and acceleration of that inflation.
The deterioration of public finances in the early postwar period was the
result of two major developments. First, the emphasis given to industrial--
ization and urbanization favored a substantial migration of labor from thce
land. As a consequence, excess labor was absorbed in public employment,
largely in the public utilities which had been nationalized oy the Govern-
ment. The resulting deficits of state enterprise have been a constant
and serious drain on the Central Government's budget. Second, high priority
was given to social expenditure, both current and capital, on education,
on health and on housing, reflecting the social aspirations of the Govern-
ment and people. At first, public finance could absorb these increased
expenditures, in part because of the fiscal contribution made by the export
policy of paying low prices to the agricultural producer while selling at
high prices in the world market. But with the fall in world market prices
for Argentine exports in later years, Government revenue fell far short
of expenditure. Growing public sector deficits then forced the Government
to economize on infrastructure expenditure, which began to decay rapidly.
Attempts were made in the mid-1950's to reverse the deterioration of public
finances, but by this time inflation itself was becoming a potent factor.
Pricing of public enterprises became less and less responsive to cost
increases and income growth, and public sector revenues lagged progess-
ively behind expenditures. The Government's anti-inflationary policy also
contributed to the decline; restrictive monetary policy, which was applied
at times of balance of payments crisis, led to progressive decline in the
liquidity of the private sector and in the non-payment of tax liabilities.
33.       In the decade ending in 1965, the Treasury's deficit averaged 25
percent of total Treasury expenditure and about 3.5 percent of GNP. The
monetary consequences were, of course, serious since a large part of the
deficit, on average about 50 percent, had to be financed by resource to the
banking system. The prolonged inflation has virtually destroyed the capital
market in Argentina and until recently the Government found it practically
impossible to borrow from the private sector, except via the non-payment of
its bills. Prolonged inflation has had other grave consequences. It has
led to a serious weakening of the monetary system, and to the creation of
an extra banking system outside the control of the Central Bank. It has
seriously impaired the housing mortgage market, making it very difficult
for many Argentinians to buy their own houses.
34.       A key element in the Government's stabilization policy inaugurated
in 1967 has been the construction of public finances through tax reform,
improved tax administration and reduction in current expenditures. As a
result of these efforts and the improved performance of state economic



- 13 -
enterprises, public sector savings rose from 2 percent of GDP in 1966 to
over 7 percent in 1968. The fiscal performance slipped somewhat in 1969
when public savings declined to around 6 percent of GDP. As a result of
this slippage and a large increase in public investment, public savings
which covered virtually all public investment in 1968, financed only about
three-quarters of public investment in 1969. While, therefore, considerable
improvements have taken place in the fiscal situation, further strengthen-
ing of public finances will be required to support expanded levels of public
investment in the future.
D. Balance of Payments
35.       The balance of payments has been a serious constraint to growth
since the early 1950's. The fall in world prices of Argentinian exports
could not be offset by a rising volume of exports because of the difficult-
ies experienced both in raising production and directing an adequate volume
of output to exports. Moreover, the large foreign exchange reserves accu-
mulated during the years of the second World War were exhausted. Efforts
to overcome the balance of payments bottleneck by heavy recourse to exter-
nal capital on unfavorable terms in the years just prior to 1963 had the
unfortunate by-product of creating a serious external debt problem. By
the beginning of 1970 Argentina's debt service payments on its external
debt (public and private) amounted to 29 percent of its foreign exchange
earnings and since the mid-1960's Argentina has been a net exporter of
capital in an effort to reduce her external debt to more manageable pro-
portions. Indeed, the key problem in the management of Argentina's balance
of payments during the next quinquennium is not only how to increase exports
but also how to acquire the necessary volume of external capital inflows
while maintaining a manageable external debt service burden.
E. Development Strategy
36.       The Argentine authorities have been acutely conscious of the
problems described above and of the shortcomings inherent in "stop-go"
economic policy making. Convinced of the need for forward planning for
longer-term economic and social development, the Government planning
agency, CONADE, in early 1971 pr.%pared a draft five-year development plan.
Among the objectives of the plan were acceleration of the pace of economic
growth, increase in real wages and improvement of the distribution of income,
reduction in unemployment and the development of backward regions of the
country. The strategy for achieving the desired goals stressed increases
in investment, with an enlarged role for public investment, to be accomplished
in part through higher rates of domestic savings, and substantial increases
in imports to be financed in part by higher ratea of growth of exports which
would result from both accelerated agricultural and industrial development.
The plan contemplated a rather moderate increase in reliance on external
capital as part of a program to reduce the country's burden of external debt.



- 14 -
It also included an ambitious public investment program as part of a strategy
of overcoming serious infrastructure bottlenecks, which have in the past beeln
obstacles to the country's development. The plan also stressed the importance
of appropriate development institution building, of proper project preparation
by the operating agencies, and of selecting priority projects and developing
higher standards of project implementation than have prevailed in the past.
37.       The draft development plan for 1971-75 envisaged an average GD)P
growth rate for the period of the plan of 7.0 percent annually, an investment
rate of 24.5 percent, an incremental capital output ratio of 3.3 and a marginal
domestic savings rate of 0.34. In addition, it projected exports to grow by
9.6 percent annually, imports by 10.5 percent annually, manufacturing activ-
ity by 8.6 percent and agricultural output by 4.4 percent annually during the
five-year period. In virtually every respect, these targets are quite
ambitious in relation to past performance.
38.       The achievement of a sustained growth of GDP in the 1971-75 period
of around 5.5 percent annually would constitute a very considerable accomplish-
ment. Analysis of import requirements, sectoral growth possibilities, export
prospects as well as the prospects for generating domestic savings and secur-
ing capital leads to the conclusion that gross domestic capital formation
could average about 23.5 percent of GDP during the period and in real terms
increase at 5.5 percent per annum. With some improvement in efficiency of
utilization of resources --- reflected in a projected capital output ratio of
4.0 during the period -- a growth in GDP of 5.5 percent appears practicable,
assuming that appropriate policies are adopted for managing the economy
(outlined elsewhere in this report) and for stimulating the growth of key
sectors. The postulated rate of growth also assumes the adoption of a
comprehensive program to promote exports, as described in Chapter V. The
program of promoting agricultural growth, (described in the following chapter)
along with export development should result in a growth of export values of
around 6 percent annually.
39.       The growth target. of 5.5 percent annually is based on the feasible
increases in public and private savings, in the growth of key sectors,
especially industry and agriculture and in improvements in the efficiency
of resource use that can be reasonably projected for the next five years.
The projected investment is consistent with the prospects for mobilizing
savings, taking due account of the savings capacity of the large Argentine
public sector (see Chapter IV below). The projection of exports is based on
an examination of the growth prospects of industry and agriculture and a
commodity-by-commodity analysis which has taken into account both domestic
supply and world market prospects. Finally, the projection of foreign capital
inflows is consistent with the Government's desire to gradually reduce the
burden of external debt service and improve the country's credit standing
abroad.
40.       It is important to stress that while the targets and assumptions
are believed to be realistic both in terms of the economy's past performance
and its prospects in the next quinquennium, the precise targets as such are



- 15 -
of secondary importance. What is perhaps most pertinent is that the
direction of policy required to achieve a high and sustained growth rate is
essentially the same regardless of the precise growth target. Thus, what
is of central importance is the adoption of appropriate policies -- institu-
tion building, management of the economy as a whole, policies to achieve
specific sectoral objectives, creation of adequate incentives to the private
sector, improvements in economic efficiency through the restoration of
markets in which prices are free to respond to market forces and appropriate
external debt management policies -- in order to fully tap che country's rich
economic resources and move the economy forward on a sustained basis. There
is, in fact, a fairly close similarity between many of the specific policies
contemplated in the CONADE plan and those spelled out in this report.
41.       The public sector investment program to the extent that it had been
formulated in early 1971 by CONADE and the various entities of the Government
appears to be in line with the economy's needs for growth. The program, how-
ever, appears to be overly ambitious in its overall magnitude. On the basis
of the prospects for financing public investment, discussed in detail in
Chapter IV below, it would seem that an annual level of public investment of
about $a 7.7 billion 1969 pesos could be achieved and would suffice to
provide necessary additions to the country's economic infrastructure and
social services over the 1971-75 period. As shown in the following table,
the Government's program would allocate the bulk of public investment to
adding essential facilities in power and fuel (33 percent of the total) and
transportation (31 percent of the total). These investments are deemed
essential to providing a growing Argentine economy with needed electricity,
the hydrocarbon fuels and a broad range of transport services, including major
additions to and improvements in the rail and road networks, as well as a
considerable expansion of shipping and air transport facilities. A substan-
tial increase of investment in communication facilities is provided for
both in order to eliminate substantial bottlenecks in existing facilities
and in providing for future requirements. The needs to be met by the invest-
ments allocated for other sectors are describee -l some detail in the
following chapter.
42.       The sectoral allocation of public investment in the proposed reduced
program is quite similar to that contemplated in the Government plan. The
point to be emphasized in achieving the sectoral objectives of the public
investment program is not the minor differences in emphasis in the two in-
vestment programs, but the need to pursue in a consistent fashion the policies
in each sector which will serve to achieve the country's goals as rapidly as
possible at minimum cost and which are discussed in the following chapter.



GROSS PUBLIC SECTOR INVESThENT
(in millions 1969 pesos)
Actual                 CONADE Program               Proposed Program
1965-69                     1971-1975                     1971-1975
Annual   Percentage        Annual      Percentage        Annual    Percentage
Average  Distribution      Average     Distribution      Average   Distribution
A. National Government Fixed Investment
Agriculture and Livestock                   3h           .9            137            2.0            137         2.5
Industry and Mining                        199          5.5            301           hL.L            301         55
Power and Fuel                           1,539         L2.3          2,281           33.L          1,846        33.7
Transportation                             984         27.0          2,109           30.9          1,670        30.5
Communications                             1L8          4.2            500            7.3            427         7.8
Education                                  153          14.2           217            3.2            174         '.2
Sanitation                                 1L2          3.9            148            2.2             86         1.6
Public Health                               23           .6            115            1.7            101         1.8   H
Housing                                     1414         1.2           298            a              271         5.0   C
Other                                      371         10.2            715           10.5            L57         8.9
Sub-Total                             3 6 40       100.0          6,823          100.0          5, 469      __ ,O
B. National Government Financial Investment
Sub-Total                               7291/                       264                           352
C. Provincial and Mhnicipal Investment
Sub-Total                             l     /                     2,55                          1p014
TOTAL (A+B+C)                         5,552                       9,638                         7,725
1/ Annual Average 1966-69.
Source:  CONADE and IBRD staff.



- 17 -
III. SECTORAL ISSUES AND PROGRAMS
43.        In the past unsound and frequently conflicting economic policies
often impaired the process of rational allocation of resources among various
sectors and at times, even within each sector. Among the major consequences
of such policies have been a distorted price structure and lagging per-
formance of a number of sectors. Thus in the case of agriculture inten-
sive production methods were frequently discouraged because agricultural
machinery enjoyed disproportionately high prices under a tariff umbrella,
while prices of agricultural products were held down by tegulatory devices.
Similarly, administrative pricing improvised on a day-to-day basis and
resting on political expediency proved particularly detrimental to public
investment in the economic infrastructure and led to a number of incon-
gruities in sectoral growth. Electric power supply and telecommunications
in the main centers were often unable to meet growing demand, the road
transportation network experienced bottlenecks in moving agricultural
products from farms to centers of consumption or export, and the railway
system deteriorated. During the past several years the Argentine author-
ities have made a concerted effort to rectify these anomalies and to restore
conditions more conducive to rational development of the several sectors.
To this end they have drawn up long-term plans indicative of the sectoral
needs. The success of these plans will, however, largely depend on taking
appropriate measures, implementing necessary policy decisions and carrying
out proper investments along the lines of the considerations presented
below.
A. Agriculture
44.       Agricultural output in the past has suffered from inadequate
incentives offered to farmers, a deficiency of public investment in the
sector and frequent changes in government policy. The stimulus to increased
output requires adequate price and export incenti-es, an infusion of public
investment to increase basic infrastructure as weii as the supply of low
priced inputs, farm credit and education.    While the _"--rt needs to cover
the entire agricultural sector, special concentration on such items of im-
portance to exports as livestock, cereals and fruits is warranted. 1/
Policies to Stimulate Output
45.       Beef.   None of the techniical constraints on Argentine beef produc-
tion and exports can be compared in importance to foot and mouth disease,
which acts to limit production and at the same time reduces the size of
potential export markets. A major difficulty in the implementation of the
anti-aftosa campaign is contamination by animals crossing international
boundaries. According to recognized authorities, an anti-aftosa campaign
must cover an entire region to be effective. At present, the campaign
against aftosa is being carried out by the National Animal Health Service
for which a total of $a 52 million has been set aside for the period
1970-74.  The Inter-American Development Bank and the Pan American Health
1/   Cf. Appendix for a discussion of the 1970-71 beef problem and outlook.



- 18 -
Organization are supporting the campaign against aftosa as well as against
tuberculosis, brucellosis and other animal diseases.    The authorities have
indicated their support for intensifying the anti-aftosa campaign and
Argentina may be expected to take the lead in initiating measures to insti-
tute a regional approach to control of the disease.
46.       The authorities are studying the revolutionary meat processing
and marketing technique, recently perfected outside of Argentina, which
involves the use of efficient small-scale electrically operated machinery.
As a result of this process, the optimum plant has become relatively small
with a capacity of about 500 head per day. At the same time, development
of refrigeration and road transportation makes it desirable to locate
plants near the source of supply, thereby obtaining transport economies
which include less damage and loss in transit. The portent of the new
development is that large investments may be required to shift the emphasis
from the big plants in Buenos Aires, La Plata and Rosario, where thousands
of cattle a day are processed, to small plants throughout the producing
areas. Similarly, present plans to attain universal upgrading to interna-
tional sanitary requirements and to capitalize on the trend towards con-
venience foods, such as coolced quick-frozen products and complete meals
prepared as individual portions, may also necessitate substantial invest-
ments.
47.       Pork and Poultry.   As part of the strategy to expand meat exports,
it would be desirable to promote the production and domestic consumption of
pork and poultry. Per capita consumption of beef in Argentina in recent years
reached between 80 and 90 kgs. per annum or more than double that in many
countries whose per capita incomes are several times larger. Experience
in other countries shows that significant increases in pork and poultry
consumption are feasible. Annual per capita consumption of pork increased
in Australia from less than 3 to 9 kgs. during the past 20 to 25 years,
while the retail price index for pork fell from 100 to 89 and prices of
other meats rose from 100 to 104. Per capita broiler consumption in Ar-
gentina is around 5 kgs. per year, about one-third that of the U.S. Annual
output is now between 90 and 100 million birds, which is about all the mar-
ket will take at the present retail prices of around $a 3.50 per kg. dressed
-- about the price of good beef steak. Consideration might be given to the
introduction of temporary subsidies for protein meals and veterinary phar-
maceuticals for both poultry and pork producers, thereby upgrading produc-
tion technologically while reducing prices. Subsidies totalling about
US$20 million per year would permit the retail price of broilers to be
reduced by approximately $a 0.50 per kg. dressed, about a 14 percent re-
duction on the recent average price, and render poultry more attractive
price-wise than beef to the housewife. If the full long-term impact of
the subsidy is to be realized, it would have to be accompanied by an
effective advertising campaign stressing both the nutritional and financial
benefits. A meaningful subsidy for hogs would probahly be somewhat higher
because pork output is now double that of broilers and feed conversion
rates are less favorable. Nonetheless, it appears to be a worthwhile ob-
jective to explore.



- 19 -
48.       Subsidizing beef substitutes would, of course, reduce supplies
of feed grains available for export. If the output of hogs and poultry
were doubled from current levels, an increment which might increase the
quantity of beef available for export by perhaps 200,000 to 225,000 tons
per year, the hog and poultry industry would consume each year up to 1.5
million tons of corn, sorghum, and protein meals which in the short-run
might be at the expense of exportable supplies. Over the long-term,
however, this extra domestic demand might well prove a stimulus to produc-
tion. Additional benefits that might emerge from modernizing and expand-
ing the hog and poultry industries include the possibility of future export
of their products, of helping to "rationalize" the national food consump-
tion pattern, and of improving agricultural resource use. These prospects
merit heavy weight in evaluating the role of subsidies to these programs.
49.       The production potential for hogs and poultry is promising.   In
recent years hog numbers in Argentina have fluctuated around a base of 4
million head and output has risen by around 2 percent annually since 1960.
Improved breeding stock is readily available. In recent years probably
one-third of the meat-type hogs marketed at the major market of Liniers
were of fully acceptable grade. A vaccination program has brought cholera
under control, although brucellosis continues to be a serious problem. As
to feed, both cereals and protein meals are in ample supply: each is a
major export item at unsubsidized prices. The Argentina Association of
Hog Breeders is actively promoting improvements in the industry; feeding
and breed trials are carried out by INTA. However, modern management
practices are not in wide use. It is probable that not over half the hog
producers feed a balanced ration and that the average marketing age is
not less than eight months at about 100 kilos. Argentina is in a position
to capitalize upon much of the hog technology which is being rapidly dev-
eloped elsewhere.
50.       Poultry also has a well-developed base on which to expand.   The
poultry (broiler) industry got underway with modc- technology in the late
1950's but broiler production costs can be sharply redured through both
forward and backward integration of the industry. The typical grower
puts out only 20,000 to 30,000 birds per year. His suppliers and process-
ors also operate on an uneconomically small scale. For example, some
hatcheries continue to survive with an output as low as 50,000 chicks a
week; there are over 400 broiler processing plants; and all but two or three
feed-processing plants are too small to permit reasonable unit costs.
51.       Fish.  The outlook for a larger fish supply is promising.   Plans are
being developed by the Government to reorganize and modernize the industry
to enable it to capitalize upon the available rich fishing resources. They
would provide for fishing ports at the mouth of the River Plate and in
Puerto Madryn, and from three to five marketing terminals with cold storage
facilities to be located at major centers of consumption. The fishing
fleet would be renewed and enlarged through the purchase of a number of
large modern fishing vessels and about a dozen fish-meal plants would be
constructed in various parts of the country. The ports and marketing
terminals would be financed with public funds. The rest of the program



- 20 -
would be carried out by the private sector supported by a credit program
through Government banks.   The authorities recognize the importance of
assuring effective competition in fish production and distribution. Accord-
ing to Government estimates, an efficient industry would reduce the retaiL
price of fish by roughly one-third to one-half and would promote fish con-
sumption, thereby benefitting beef exports.
52.       Forest Products.   Argentina has very considerable forestry resources
and potential for development.   In spite of this, it now imports about one-
half of its requirements for forest products.    In the 1970 period, fore-
products accounted for about 10 percent of the national import bill. Imports
of timber approximate US$75 million per year; chemical pulp, US$50 mil'ion;
and newsprint, US$50 million. An appropriate development effort l--uld
contribute much to increasing domestic supplies of these products and to
foreign exchange savings.
53.       Reforestation has been underway for many years and in 1964 man-
made forest totalled some 261,000 hectares. This has been supported by
Fondo Forestal operated by Banco de la Nacion. The Bank has a total of
about $a 52 million outstanding under this and other programs of reforesta-
tion. The National Forestry Service jointly with the provincial forestry
offices has about 20 million hectares under some degree of control, includ-
ing issuance of cutting permits. Some 1.5 million hectares have been sur-
veyed by aerial photography. UNDP assistance for inventory and evaluation
work for an additional 16 million hectares in the northwest was requested
in late 1969. The National Government investment plan sets aside some
$a 15 million for the National Forestry Service in 1970-74. Half of this
will be spent to fight forest fires which have caused losses as high as
$a 42 million in a single year. Given the great importance of forest
products for the balance of payments, the authorities may wish to explore
the feasibility of expanding fixed investment and credit facilities for
reforestation. In planning the national road program, special consideration
might be given to the construction of sufficient access roads to the forest
districts in the northeast, northwest and Patagonia.
54.       Use of Credit.   The Government-owned banks, Banco de la Nacion and
the provincial banks, chief among them the Banco de la Provincia de Buenos
Aires, provide most agricultural credit through organized financial institu-
tions. It is generally recognized that only a small proportion, about 2 per-
cent, of total bank credit outstanding to agriculture is of a long-term
character, with the bulk of the loans, about 70 percent, maturing in less than
a year. With the deceleration of inflation after 1967, a considerable in-
crease in agricultural credlt outstanding in real terms took place at an annual
rate of approximately US$200 million during 1968-69. While the Banco de la
Nacion has made some loans for pasture improvement, mechanization and grain
storage, much larger efforts will have to be made in the field of develop-
ment loans to agriculture where considerable possibilities are believed to
exist, e.g. the present rate of stocking beef cattle is less than one animal
unit per hectare and it is technically feasible to more than double this
rate through pasture improvement. In reviewing the issues relating to



- 21 -
agricultural credit, the authorities will probably want to consider the
desirability of instituting positive interest rates, perhaps through an
indexing system, to help prevent misallocation of resources in agriculture
and leakages of farm credit elsewhere.
55.       Use of Fertilizer.  Fertilizer use in Argentina is very low.   The
demand for fertilizers has been limited by the prolonged rural depression
and perhaps by an inadequate research effort in fertilizers, complementary
plant stock and cultivation practices. Faced with limited demand, private
enterprise has not seen fit to install effective distribution or selling
facilities. This, along with tariff protection to the domestic fertilizer
industry, accounts for much of the price premium which Argentine farmers must
pay for fertilizers. Although this premium does not lead to fertilizer prices
which are prohibitively high as compared to prices abroad, consumption
would be stimulated by lower prices. Since the potential return of fer-
tilizers is very high, particularly for phosphates applied to pastures,
phosphate fertilizers merit a subsidy to expand use quickly and help in-
crease beef output and exports. The authorities are cognizant of these
potentialities and it may be worthwhile to explore the economics of such
a subsidy scheme.
Programs to Improve Infrastructure
56.       Transportation.  Transportation of agricultural products from the
farm to the market is reputed to be a bottleneck. Central Government ex-
penditure for the development of rural roads has experienced wide fluctuations
in the past although a systematic effort to improve rural roads is reported
to be now getting under way and should be encouraged when fully justified
by production potential.
57.       Electrification. Rural electrification reached less than 3 percent
of the total number of farms at the end of 1969. The Government's Department
for Rural Electrification plans to make electrj;_zty available to an additional
35,000 farms, bringing the total proportion to sorm 10 percent.   This
program calls for a total investment of US$45 millio`, of which US$15
million is from the IDB and was intended to be completed in three years
but progress has been slow. Rural water supply and sanitation are also
very inadequate and public health service in rural areas is substantially
below urban standards. According to the authorities, the scarcity of
competent farm management and the need to retain the services of farm
labor make the provision of rural amenities vital for the development of
the sector. Electrification also appears to be an important factor in the
modernization of some agricultural processes where it can raise output
and efficiency.
58.       Irrigation.  Agua y Energia Electrica (AyEE) has several irrigation
projects under way, mainly in connection with hydroelectric power plants also
constructed by it. The two major projects -- the General Belgrano Dam on the
Juramento River and the Rio Dulce irrigation project -- will cost about
$a 158 million. Present plans do not call for major new irrigation proj-
ects. Considering the large area of good arable land in Argentina and the
extensive methods used in its exploitation as well as previous questionable



- 22 -
irrigation investments, the authorities' reluctance to engage in expensive
irrigation projects is fully understandable and justifiable. On the other
hand, regional development considerations and the need to complete irri-
gation works partially executed may militate against complete withdrawal
from further irrigation investments, especially if and when remunerative
markets for high value crops are realistically envisaged. However, the
prevailing official view appears to be that future investments should be
undertaken only if they are of demonstrably high priority. Organizational
improvements of potentially great significance have recently been under-
taken in the management of water resources, but a good deal remains to
be done before the national water resources can be soundly developed.
59.       Marketing.  The authorities are concerned over the adverse effects
of shortcomings in storing and marketing farm products. The physical market-
ing facilities for grains, including on-farm storage, are reputedly insuffi-
cient as evidenced by the loss of millions of truck and railcar days through
waiting at the ports to unload. Some improvements may be expected when
construction of seven grain elevators in six major Argentine ports, partly
financed by IDB, is completed. Construction of a deep-water port at the
mouth of the River Plate is now under study with the view of accommodating
large modern grain tankers. The problem of credit for on-farm storage
facilities also warrants exploring.
60.       The Grain Board and the rest of the grain trade may find it desir-
able to institute better grading with the view of raising the value of
grain exports. They may also wish to launch a campaign to sell wheat on a
guaranteed protein basis since Argentina now loses customers in Western
Europe and Japan where millers require such guarantees. Revision of the
present undifferentiated one-class system for corn and sorghum would provide
incentives to farmers for producing high quality products.
61.       Education, Research and Extension.   In 1969, intermediate level
agricultural student enrollment totalled around 4,400 or less than 7 percent
of total secondary pupils. Recently the authorities have recognized the need
for intensifying the educational effort in agriculture as regards middle level
technical agricultural schools which specialize in applied farm techniques
and on whose graduates the recruitment of agricultural managers must be based
(see Section H below).
62.       The present agricultural research and extension program was
launched in 1956 with the establishment of INTA (Instituto Nacional de
Tecnologia Agropecuaria). In addition to its headquarters with ten
specialized offices in Buenos Aires, INTA maintains ten regional centers
which supervise the experimental and extension stations for crops and
livestock. There were 30 experimental stations and 180 extension offices
with 423 full-time technical employees at the end of 1968. INTA has 4,000
employees of which 32 percent are technical personnel. It has achieved
important results, including improvement of the crop returns from corn and
sorghum, the transformation of potato cultivation and achievement of



- 23 -
greater efficiency in cattle ranching. There are some indications that
INTA's organization is too highly centralized and that this may have
inhibited more intimate cooperation locally with farmers and a more active
role by extension services.
63.       Excessive centralization of INTA might be somewhat offset by the
recent growth in the number of private consultant firms in farm management
and by the CREA (Consorcios Regionales de Experimentacion Agricola), a
private association of progressive farmers. At present, 70 rREA member
groups cover 2 million hectares; another 64 CREA groups are being formed.
CREA members are visited monthly by a contracted extension worker. Estab-
lishment of closer cooperation and effective working relationships between
CREA and INTA would be highly desirable.
64.       Cooperative Movement.   There are about 1,400 agricultural coopera-
tives with half a million members, a figure that has been constant for many
years. The movement is active in the purchase of farm inputs and product
marketing. An agricultural cooperative bank was established in 1965 but it
is very small. The bank has not been able to fulfill more than a small part
of the role that its founders envisioned, in part because expected financial
and technical assistance from abroad was not forthcoming. It is generally
believed that a vigorous and progressive cooperative movement could
provide an important vehicle for technical progress and increased output
and efficiency. The Cooperative Law, not amended since its adoption in
1926, could be reviewed with the aim of using it to terminate the lengthy
stagnation and isolation of the cooperative movement. At the same time,
the authorities might wish to investigate possibilities of financial assis-
tance for improved cooperative marketing and processing facilities to help
deal with the problems discussed earlier. The Law is now administered by
the Secretariat of Social Security and consideration might be given to
moving the administration to the Secretariat of Agriculture, thereby
achieving better coordination of the agricultural cooperatives with other
agricultural activities. Consideration could also be given to the possible
channeling through the Cooperative Bank of financial assistance which at
the present time the Banco de la Nacion makes directly to cooperatives.
If feasible, this financial assistance could be coordinated with technical
assistance from INTA. Lastly, the cooperatives could be used as a channel
for extension work and in the development of agricultural education.
B. Industry
65.       Desirable changes in the industrial sector would be greatly fa-
cilitated by a new approach to industrial efficiency. New public invest-
ments in industry are of far less significance today. The main action
required relates to improvements in methods of production and to the ex-
pansion of markets.
66.       Industrial Efficiency.   The problem of industrial productivity
has not received the attention it deserves, with the result that output per



- 24 -
per worker has been increasing by only one percent annually since 1966.
With high rates of inflation and a protected domestic market, employers
concentrated on the movement of prices and the maintenance of adequate
liquidity, paying relatively little attention to productivity increases.
As a consequence, the structure of production today offers substantial
possibilities for cost reduction.
67.       Special attention needs to be given to the role of wages in
production costs. While increases in industrial wages have been at the
root of cost-push inflation, the level of industrial wages in Argentina
does not appear excessive at present. The process of escalating wages and
prices of industrial products proportionately to previous changes in the
cost of living appears to have represented a distinct over-reaction on the
part of the business community. Meat and wheat, the only items whose
domestic prices are usually affected by exchange rate movements, are jointly
responsible for only one-fifth of the typical family budget. In the hypo-
thetical case of a 25 percent increase in prices of these two principal
food items, the cost of living index should consequently move up by not
more than 5 percent. Moreover, since the combined direct and indirect
labor component of manufacturing amounts to some 20 percent of total product-
ion costs, if wage increases are adjusted in line with the cost of living
index, a 25 percent increase in prices of food should entail only a one
percent increase in the costs of industrial production. If wages and prices
of industrial products are adjusted their effects on industrial costs and
on inflation would be minimized.
68.       Decreases in fixed costs of industrial production offer another
possibility for slowing down the rate of price increases to Argentine
industry. High fixed costs 1/ are due to three basic sources: small average
size of industrial plants, excessive product diversification in the larger
industrial firms and idle capacity. The average industrial firm in Argentina
employs 10 workers and its annual output is on the order of US$27,000 compared
to the average of 19 workers and an output per enterprise of US$54,000 in
Mexico. Maintenance of plants of suboptimum size was facilitated in Argen-
tina by the fact that under conditions of a highly sheltered domestic market
even marginal plants could continue to sell their products at prices above
their high costs. On the other hand, the larger enterprises had a tendency
to avoid specialization in the face of an uncertain domestic market. This
has led to a dissipation of organizational, engineering and sales talent over
too many lines of industrial activity. At the root of this was, of course,
the import-substitution drive supported by Government policies.
69.       The merging of industrial firms and more sharply defined
specialization should enable Argentine industry to profit from economies of
scale. Appropriate policies encouraging industrialists to concentrate pro-
duction in optimum-size units and to minimize production costs would help
1/   The share of overhead in production costs of Argentine industry is
around 30 percent, compared with about 20 percent in U.S. industry.



- 25 -
to phase out many marginal, inefficient enterprises with little risk that
unemployment would develop. It is not necessarily the small-scale industrial
enterprises that are likely to disappear under the impetus of such policies.
A transformation of industrial structure in Argentina would mainly affect the
medium-sized enterprises which would have to merge into larger units or
disappear.
70.       Specialization agreements among subsidiaries of large interna-
tional firms offer another possibility of reducing fixed costs. Such agree-
ments should prevent excessive and costly product diversification because
they would be based on specialization in production of types of products
or parts. Inter-firm specialization would also help to change the negative
attitude toward exports on the part of local subsidiaries of international
firms which are bound by agreements with parent companies.
71.       Idle capacity constitutes another source of high fixed costs.
A development strategy designed to promote stable growth and market expansion
should help eliminate the principal cause of idle capacity. Idle capacity
could be reduced by channelling production into export markets through
improvements in international competitiveness of domestic industries and
extension of the existing export subsidy regime. The Argentine mechanical
and electrical industries are relatively modern and well organized, and there
is no reason why Argentina could not manage to sell abroad an increasing
part of their capacity and ultimately become one of the principal suppliers
of investment goods to the countries of South America. On the other hand,
some highly capital-intensive industries which produce intermediate goods,
e.g. large scale chemical or petrochemical plants, may have relatively fewer
chances of becoming highly successful, given the fact that Argentina lacks
both a domestic raw material base and a sufficiently wide domestic market
outlet. 1/
72.       Public Policies Toward Industry.   Government policies by encourag-
ing entrepreneurs to adopt a basic change in their attitudes, can help to
create a new business environment. Because of the close interrelation of
the effects of various public policies, new policy directives will be most
effective if formulated in a consistent manner and if they cover the areas
of protection, promotion, financing and export inducement.
73.       In order to limit industrial price increases, appropriate protec-
tionist policies would be based :n a rational use of the import tariff sys-
tem, periodically adjusted in line with the movements in the exchange rate.
Prior to 1967, the high tariff level left considerable room for price in-
creases, especially following steep devaluations of the peso. During the
past three years, however, by adjusting downward the level of import duties
1/   Price comparisons also point in this direction.    Argentine food prices
are in many cases below world market prices; its prices of machinery
exceed world market prices by 50 percent; but prices of chemicals are
on the average 166 percent above the world level.



- 26 -
on industrial products, when the currency was devalued, Argentina managed
to keep practically unchanged the effective exchange rate of about 5.7 peso!;
to the U.S. dollar. The scope for price increases narrowed considerably,
and in 1969, although average tariffs added 79 percent to import prices,
the difference between domestic and world market prices of manufactured
goods averaged about 43 percent. A gradual disappearance of this cushion
would induce Argentine industrialists to searchi for ways of reducing costs.
74.       The effects on fostering industrial efficiency from the use of
tariffs and the exchange rate would be reinforced by modifying the indus-
trial promotion system to reduce the exceptional privileges to various in-
dustries or even to individual enterprises, about one-third of all indus-
trial establishments, including practically all public enterprises have
recently benefitted from such special laws. While it may be necessary on
occasions to grant special fiscal or financial privileges to get a desira-
ble new industrial venture launched, this should be considered an exception.
To make the industrial promotion in Argentina rely more on an economic ra-
tionale, it would be advisable to adopt a phasing-out period during which
special privileges would be gradually reduced. It is desirable to spell
out in the law the prices at which thie new firm would be expected to sell
its products; such prices could slide so that they reach the world market
level when output reaches a designated capacity. The 1970 law relating to
the petrochemical industry meets the requirements of the fixed time horizon
and the international price level.
75.       By modifying the system of financial assistance to private in-
dustry, the Government can help to improve the efficiency of both current
operations and the investment process. The Government is already attempt-
ing to improve the mechanism for channeling capital to industry by revitaliz-
ing the inadequate Banco Industrial which has recently been renamed Banco
Nacional de Desarrollo (National Development Bank). The new institution is
to be assigned the priority task of financing the modernization of industries
which are organizationally and technologically backward, initially the meat
packing industry and the textile industry. The Government has yet to take
a decision on whether it will move ahead to encourage the establishment of
private investment banks. The changes under way should contribute to res-
toring to each principal source of financing its proper role but this is only
likely to be achieve,d if accompanied by other appropriate measures in the
financial arena - particularly with respect to legal depreciation allowances
and interest rate policy. Depreciation reserves are now responsible for only
one-fifth of the internal financing, as against one-half in the U.S., mainly
because the value of assets has not been properly adjusted. This has ad-
versely affected the capital market because industrial firms had to retain
a large part of their profits to compensate for inadequate depreciation al-
lowances and had to distribute stock instead of cash dividends. In a similar
fashion, the normal lending activity of the banking system has become dis-
torted because of the legal limits imposed on the interest rate and the re-
sulting negative interest rate. Industrial firms have had to compensate for
the inadequate supply of banking resources by increasing their commercial
indebtedness and on occasion by deferring payments of taxes or other lia-
bilities.



- 27 -
76.       A new export incentive system for manufactures was recently
adopted and its further strengthening would be most beneficial to the
balance of payments. The export potential of Argentina is considerable but
only 3.2 percent of industrial output is now exported. Exports of products
based on animal husbandry, such as leather and meat packing, can certainly
become much more developed than at present. To utilize the country's export
potential more fully, stronger incentives than in the past will be necessary.
The export subsidy fluctuated between 15 and 20 percent of the export price.
Their attraction was far behind that offered firms involved in import substi-
tution which benefit from a tariff barrier of some 70 percent. As noted
earlier, it would be desirable to link exports to imports through coopera-
tion agreements among subsidiaries of large international firms located in
Argentina and elsewhere. The present system of quota restrictions on cars,
tractors and parts has resulted in inefficient and high cost production.
It would be preferable to determine which parts or types are produced more
efficiently by their counterparts abroad, to withdraw these from the import
quota and require domestic firms to earn the right to import such cheaper
parts by exporting more efficiently produced parts and components to other
participants in the specialization agreement.
77.       Public Programs in Industry.   Public investment in industry has not
been very significant in Argentina during the past decade. It amounted to
only 6 percent of total fixed public investment during 1965-69, or $55 mil-
lion annually, compared with annual private fixed investment of about $600
million. Public investment is expected to grow considerably in the near
future. Investment in new steel and aluminum capacities, to be carried out
under the auspices of the Ministry of Defense, is to reach about $160 million
annually. The Government may also decide to participate in large industrial
projects in other industries, such as sodium carbonate (soda ash), newsprint
and petrochemicals, which could well raise total public investment in the
manufacturing industry to about $200 million annually.
78.       The largest part of public investment will be channeled into
SOMISA, the principal Argentine integrated steel plant, which is to be
considerably expanded. SOMISA is producing now only 0.8 million tons of
steel, a volume of production which is low by any standard. Its present
expansion phase, to be finished within the coming year, aims at elimina-
ting bottlenecks in the steel rolling process. In the next phase, to be
completed before 1975, the new iron and steel-making capacities will be
added to those presently in operation and SOMISA's annual output will
reach over two million tons.
79.       The Argentine steel industry is affected by several major short-
comings. Badly balanced production is probably the most acute one because
Argentina's iron-making capacities are insufficiently developed and the
industry continues to rely on imported pig iron. The production process is
overly subdivided and there is excessive movement of steel products between
enterprises which entails an additional cost of transportation and fuel.
The size of production units is below wh-at is generally consicdered as
optimum, but despite the small size, they are not always fully utilized
because of a sharply fluctuating demand for steel.



- 28 -
80.       The high price of steel is a logical consequence of these ;hort-
comings.  The Argentine level of steel prices exceeded European prices at
their exceptionally high 1970 peak by about 30 percent.    Suchi a high price
level has probably impeded a greater utilization of steel in t-ibe Argent.i.t'
economiiy.  I  ;1.e past decade, per capita steel consumption iln Argentina
fluctuated arounid 110 kilograms, compared witlh 220 kilograms consumedt in
countr tes witb similar Incomes.
81.       There is no reason why Argentina should not become self-sufficiect
In steel productioni but thie level of this self-sufficiency wil. hilve to
fixed in re]lal.on to a realistic projection of the domestic market.    II.
past, high prices of steel may have prevented its wider utilization.   T1.
achieve lower steel prices and greater utilization, the structure of ftyLure
steel production of SOMISA will have to be rationalized an.l plan-6 d ill con-
junction with the development of otlher Argentine steel plants.
82.       It would be aLso advisable that the decision to invest public
funds in the construction of an aluminum plant be preceded by an analysis
of related, but broader economic factors, to find specifically to what
degree the perspectives and competitive forces of the world market of
aluminum might affect this project. The project is justified tecinologic-
ally and economically in terms of total output which envisions 40 percent
going to export markets. At this level of output the cost of electricity
is 4.Z mills/kwh. In the event that only one-fourth of the plant's pro-
duction is exported, the per unit cost of electricity rises to about 5.7
mills/kwh wlhich is three times the electricity prices paid by efficient
aluminum plants in Canada, Norway or the northwest of the U.S.
83.       In its (lecisions to invest in other industries, such as newsprint,
soda ash and petrochemicals, the Argentine Government will do well to con-
sider the possibility of deriving a long-term advantage from cooperation
with neighboring countries. In particular, Paraguay and Chile have ample
and cheap forest resources, while the petrochemical industry of Brazil is
now attaining an internationally competitive level. Should Argentina decide
to rely on these suppliers for some of its needs, there should also be a
greater receptivity in these markets for Argentine exports, in particular
for agricultural machinery, transport equipment and machine tools.
C. Electricity
Problemns and Policies
84.       Argentina relies predominantly on thermal sources of energy which
account for some 92 percent of the installed capacity, although in Latin
America as a whole, thermal sources are only half as important. While
Argentina has ample hydroelectric potential, currently estimated at about
30,000 MW, only 2 percent has been developed, mainly due to its remoteness
from consumption centers and the pricing policy for fuel oil by the Gov-
ernment oil monopoly which disregards the cost of transport of crude in
the refinery price. To create incentives for tapping other than thermal
sources of electric energy, this pricing policy needs to be adjusted



- 29 -
85.       Demand for electricity is highly concentrated in a few regions
serviced by a small number of companies. The Greater Buenos Aires-Litoral
market, served almost entirely by the Government-owned Servicios Electricos
del Gran Buenos Aires, S.A. (SEGBA) and the privately-owned Compania Italo-
Argentina de Electricidad, S.A. (CIAE), presently accounts for 75 percent
of public power consumption. Another 22 percent is divided equally between
three systems -- (1) Cordoba, supplied by the provincial power enterprise
(EPEC) and the Central Government Water and Energy Board (AyEE); (2) Men-
doza, served by the provincial power department (DPE); and (3) southern
Buenos Aires province, supplied by the provincial power department (DEBA)
and by AyEE. The remaining needs for public power (3 percent) are met:
mainly by AyEE and a country-wide network of cooperatives which AyEE and
provincial power authorities supply. In rural areas a small percentage of
households is connected to the distribution system. About one-fourth of
total energy generated in Argentina is contributed by "captive plants" much
of which was installed by industrial and commercial enterprises during
periods of power shortage, mainly between 1958 and 1964.
86.       The fixing of adequate power rates still remains a problem.    While
both SEGBA and Hidronor are bound by firm provisions to take all necessary
steps to adjust power rates so as to produce revenues sufficient to yield
a reasonable rate of return, AyEE, DEBA and DPE have not been enforcing an
effective rate policy and this shortcoming needs to be rectified. Without
adequate financial rates of return which generate enough cash, they are not
in a position to finance a significant portion of their investment programs.
The power utilities together with the Secretariat of Energy should review
their financing requirements and reexamine their present rate structures
to ensure that production costs are adequately reflected in the tariffs
charged and that there is equity in the rates charged to various categories
of consumers, as well as in the returns allowed to various energy suppliers.
Present Power Supply and Future Programs
87.       Substantial investments in power facilities, primarily in the
Buenos Aires area, eliminated serious shortages and brought into existence
an adequate power supply by 1964. The installed generating capacity
reached roughly 6,000 MW and electricity generated about 20,000 GWh by 1969.
Demand for power grew at a rate of about 7 percent annually from 1958 through
1969. Owing to an unexpectedly heavy growth in demand since 1969, mainly
for air-conditioning, periods of load shedding reappeared in the Greater
Buenos Aires-Litoral market, while Cordoba experienced power shortages due
to plant failures. These inadequacies in the service may well continue
during 1971 and 1972 since summer peak loads now equal winter peak loads
and require year-round operation of generating plant, much of which is
quite old.
88.       Two large projects are expected to make a significant contribu-
tion to the Buenos Aires power supply beginning in 1973. The first two
of the six 200 MW units to be installed at the hydroelectric station at
El Chocon on the Limay River, 700 miles southwest of Buenos Aires, are due
for commissioning in early 1973. Construction of this project by the Gov-
ernment-owned Hidroelectrice Norpatagonica, S.A. (Hidronor) is back on



- 30 --
schedule after delays caused by labor unrest in early 1970. The Federal
Atomic Energy Commission's (CNEA) 320 MW nuclear station at Atucha, about
60 miles nortlhwest of Buenos Aires, is now expected to start operations
in 1973, a year later than originally planned. However, the initial output
of this plant is likely to be substantially below the levels projected by
CNEA, i.e. less than two-thirds of full capacity in the first year of
operation and 100 percent in the second year. Two more units at El Chocon
should be commissioned in 1974 and 350 MW thermal unit in Buenos Aires may
be completed by SEGBA in 1975.
89.       With financial assistance from the Inter-American Development
Bank (IDB), the interconnection of the Buenos Aires and Cordoba systems
is undeir construction and due for commissioning in 1972. Over the near
term, the Government is planning another interconnection between thc
southern part of Buenos Aires province and Greater Buenos Ai ,s.    A con-
nection of the Cordoba and Mendoza systems is being considered for a later
date. The Government should carefully evaluate these interconnections
technically and economically as a means of reducing the need for addition-
al generation facilities without lowering the system reliability.
90.       The Mendoza market is experiencing a high growth in demand and
this may well continue for a few more years together with a high annual
load factor. It is therefore recommended that the Government give special
consideration to advancing from 1977 to 1975 the commission of the second
thermal station at Lujan de Cuyo. In the northwest of the country the
decline of the sugar cane industry around Tucuman has resulted in reduced
growth of power consumption and led to excess generating plant. Some
years ago the Government declared the region to be a "development area@
entitled to tax incentives, development grants and cheap energy in order
to attract industries. Considerable success has been achieved and excess
capacity is gradually being absorbed. The process may be accelerated by
the shortly expected connection between Tucuman and Salta-Jujuy where a
generation deficit is developing.
91.       Financing requirements for the power sector between 1971 and 1975
are estimated at US$1.9 billion, including about US$530 million in foreign
exchange. The financing of foreign exchange costs of power facilities plan-
ned during this period has not yet been arranged for the following: the
Alicura hydroelectric project and the Cerros Colorados development of
Hidronor (about US$100 million required starting in 1972); generation,
transmission and distribution equipment for SEGBA (about US$120 million
required starting in 1973); the Pilar steam power station for EPEC (US$10
million needed in 1971); and a second steam plant at Lujan de Cuyo for AYEE
(US$15 million needed beginning with 1973).
Organization and Planning for Long-Term Power Needs
92.       In the past, there has been lack of adequace long-range planning
for the power sector. Now, however, the Secretary of Energy has initiated
systematic studies of power requirements in the area (including Uruguay) which
will eventually be interconnected.   The objective should be that these
studies identify, from among several possible alternatives, that which will



31 -
serve the demand at least cost. The planning will ensure that the proportions
of the generating plant assigned to base, mid-load and peaking duties are
correct.  The plan will need to be reviewed year by year and made more precise.
D. Fuels
93.       Argentina relies on petroleum products and natural eas for 88
percent of its primary energy consumption. Virtual self-sufficiency in
supplies of petroleum, motivated by reasons of national security and
savings of foreign exchange, has been achieved. Substantial investments
were carried out in recent years which made possible the increase in the
level of petroleum production to 22.2 million cubic meters and to reduce
imports to 2.6 million cubic meters. However, the level of oil reserves
is still reputedly low, about 12 years at the current rate of consumption,
despite continued extensive prospecting.
94.       The administration of the two main fuel organizations -- the
State Petroleum (YPF) and the State Gas Corporation (Gas del Estado) -- has
been strengthened in recent years and both now operate on a reasonably
sound financial basis, generating adequate financial resources to cover
their own investments. The State Coal Corporation (YCF), which met slightly
less than half of the country's coal needs of 1.4 million tons in 1970,
continues to require substantial budgetary support. While private com-
panies, both foreign and domestic, have been encouraged to participate in
oil exploration in recent years, the main emphasis will be on exploration
by YPF which presently produces 99 percent of the total crude petroleum
production. The objective is to raise petroleum reserves to 15 times annual
needs by 1973 or 1974 through substantially larger investments by YPF in
exploration; in 1971, these investments are budgeted at US$86 million, double
the amount spent in 1970.
95.       Consumption of petroleum is projected to rise to 33 million cubic
meters by 1975 of which only 1 million cubic meters, mainly specialized
finished products, will be imported. This considerable increase in pro-
duction will require substantial investments in refining and transportation
facilities. Plans call for the enlargement of the refineries at Lujan
de Cuyo, Plaza Huincul and Campo Duran and the completion of the La Plata
refineries for the production of lubricants. The increased volume of pro-
duction, combined with the need to reduce costs, will require additional
pipeline facilities. Three oil tankers of 35,000 tons will be added to the
fleet of YPF. Government policy is aiming at strengthening the market
position of YPF and increasing utilization of its capacity which at present
refines only 58 percent of the total output of crude, the balance being
refined and distributed by the private companies. A recent Government
decision provides that the YPF share in refining is to be raised to 65
percent; this increment, however, is to continue to be marketed through
the facilities of the private companies.



- 32 -
96.       The supply of natural gas is projected to increase from 6,100
millioni cubic meters in 1970 (all domestically produced) to 9,500 million
cubic meters in 1975.   Of t:his increase, at least 1,460 million cubic mc,'rs
will be imported from Bolivia.   Only about 20 percent of the natural gas
is used for household consumption and about 15 percent for power generation,
the remaining 65 percent is utilized in industry. This consumption pattern
is expected to continue during the next five years and the increased supply
should help eliminate present seasonal shortages as well as meet growing
demand.
97.       The expansion program in the gas industry provides for investments
in new gas fields, the building of a pipeline in Patagonia from El Condor
to Pico Truncado and of a pipeline parallel to the existing one fro-:I Bahia
Blanca to Greater Buenos Aires. Provision is also made for the installation
of compressor plants for the latter pipeline and for the Neuquen-Bahia
Blanca pipeline. Planned investments include storage installations for
natural and liquid gas in various parts of the country as well as improve-
ment of gas mains in Greater Buenos Aires and Rosario.
E. Transportation
98.       The transportation system as a whole has fairly adequate capacity
on main routes for the present needs of the country. Economic development
is not seriously retarded by lack of transport, except perhaps for inade-
quacies in the feeder road system in the agricultural areas. Nonetheless,
there is considerable scope for improving the efficiency of the transport
system, a need which is underscored by the likelihood that the demand for
transport will increase substantially over the near term if sustained econ-
omic growth is achieved.
Organization, Planning and Research
99.       The Government transport development strategy is to provide
transport facilities in response to recognizable demand and to give prior-
ity to improving the quality of service offered by the various transport
modes. This strategy will have to be based on sound economic analysis
of investment projects, efficient operation of facilities and proper
pricing of services. The implementation of this strategy depends at present
mainly on the successful execution of the railroad recovery program, al-
ready under way, and on achieving effective allocation of highway invest-
ments among the primary, secondary, and feeder road networks. As an integral
part of this process, a concerted and continuous planning effort is required.
This effort should emphasize coordination among transport modes and proj-
ects to insure that the elements selected for inclusion in the investment
plan will meet transportation needs most economically.
100.      Organization of Public Administration.   Among the obstacles to
effective policy formulation and transport coordination noted by previous



- 33 -
Bank missions was the widespread division of functions among different minis-
tries and agencies involved in the transport sector. The Ministry Reorgani-
zation Law of October 1969 (ley 18416) considerably improved this situation.
Most of the Government agencies dealing with transport have been brought
under the administration of the Ministry of Public Works and Services.
101.      Organization of Enterprises.   A series of important improvements
in the operating efficiency of the Argentine state transport enterprises has
been instituted and efforts in this direction should be cont,uued. Since
1967 the quality of railroad service has been improved; traffic has increased
and the financial deficit has been substantially reduced. The major railway
investment and rehabilitation program proposed for 1971-75 should produce
further significant results. The Government port administration, river
fleet, and ocean shipping line have all improved their operations and
financial performance since 1967 and should continue their efforts in
these directions.
102.      The transport enterprises are large and complex and need manage-
ment capabilities of the highest quality. The Government salary scale is
an obstacle to recruitment and retention of competent civilian management
talent. Special pay grades or procedures for making exceptions to the
standard Government scale should be developed for management compensation
so that these enterprises can become more competitive with private indus-
try in developing the civilian management staffs on whom the long-term
efficiency of transport operations will depend.
103.      Planning and Research.   The Government operating agencies and
administrative organizations in the transport sector are conscious of the
need for planning, and those responsible for future investments have planning
programs in various stages of development. Within the Secretariat of Public
Works and Transport, the Sectoral Development Office is an important element
in the transport policy formation, planning and coordination process; it is
the official liaison with CONADE. The Government proposes strengthening
this office to enable it to carry out or supervise a number of urgent studies.
Studies need to be undertaken on the requirements for feeder roads; the
problem of urban congestion; and coordination of road, rail and water trans-
port in main corridors. Regional transportation studies, such as the one
done under the supervision of the National Highway Department (Vialidad) for
road, rail, and water transport in the Mesopotamia region also need to be
undertaken. The quality of planning is presently impaired by a lack of
basic data although some progress has been made recently in improving the
availability of data.
104.      A serious problem exists with respect to the transportation of
grain; there are long periods during which hundreds of railroad cars and
trucks are immobilized in ports awaiting unloading while port elevators are
full and cannot accept grain. An overall systems analysis of grain rnarket-
ing, storage, and movement should be undertaken jointly by the Secretariat
of Agriculture and the Secretariat of Public Works and Transport to iden-
tify the optinum combination of Government marketing procedures, port
and interior storage, and transport services for handling this important
product of Argentina's economy.



- 34 -
105.      The needs for impr-ovement and construction of roads below the
secondary level, which are classified as fecder or farm-to-market roads,
have apparently not been ful]ly explored. It would be desirable to conduct
a pilot study of feeder roads in a selected region to determine the empha-
sis that needs to be given to such roads in the future.    In view of the
importance of coordination between agricultural development plans and pro-
vincial and local road programws, the Sectoral Development Office of the
Secretariat of Public Works and Transport should supervise this study.
The existing system for allocating national funds to provinces for highway
construction does not appear to give adequate consideration to the relative
needs for roads in the various provinces. The Government is studying modi-
fication of the system to make it more flexible and responsive to the re-
quirements of the provinces.
Public Programs and Policies
106.      Public investments in the transport sector proposed by the
CONADE Plan early this year for the 1971-75 period are on the order of
magnitude of US$1.7 billion, exclusive of railroad rehabilitation. The
possibilities of waste are legion in carrying out investments of this
magnitude. At the present stage of investment planning, many projects
in the transport sector have been identified only in general terms and
feasibility studies have not yet been prepared. It is important that
appropriate studies be made before final decisions are taken in order to
minimize waste. At least one major investment, the Zarate-Brazo Largo
Bridge across the Rio Parana, appears to be going forward without the benefit
of an adequate economic study.
107.      Railroads and Roads.   The large railway system, constructed mainly
in the late nineteenth and early twentieth centuries, has badly deteriorated.
Although management has greatly improved in the past several years, large
operating deficits persist and constitute a major Government fiscal problem.
Since 1960, there has been a marked shift of traffic from railroads to
trucks. The extensive highway system, most of which was constructed after
the railroads had been developed, is generally well maintained. Hlowever,
with the rapid expansion of the vehicle fleet in recent years, urban con-
gestion has become a serious problem.
108.      The Argentine railways' administration has prepared a detailed
1971-75 plan for the improvement of operations and financial recovery of
the railway system.  The plan entails an investment of US$839 million,
providing for spare parts to restore the serviceability of many locomo-
tives now disabled, purchase of new locomotives and railway cars, accui-
sition of signalling and telecommunications equipment, reorganization of
repair shops, and improvements of deteriorated tracks, bridges and struc-
tures. Steam traction would be phased out in favor of lower cost diesel
traction. The proposed investment and rehabilitatior plan is justified
economically and the Bank has made a loan of US$84 million to assist its
execution.
109.      Pricing policies for the railroads and for the use of highways
are generally satisfactory (except in the Greater Buenos Aires area), from



- 35 -
the stand-point of resource use, i.e. recovering from users of a service
the cost of the resources consumed. With the execution of the railway
rehabilitation program, both transport modes will generate revenues for
the Government in excess of the marginal costs of providing the transport
services without significant distortion of traffic patterns or diminution
of total traffic.
110.      The national Highway Department (Vialidad) has estimated that
total national government investment in roads would amount to about US$1.2
billion during the 1970-74 period. 1/ The exact amount of economically
justified highway investments will not be known until the individual proj-
ects have been evaluated. Feasibility studies are ready or under way for
the road projects proposed for early implementation. Although the National
IHighway Department has been building up its professional staff, a highway
program of the projected magnitude would impose a very heavy work load in
project planning, contracting and supervision.
111.      Should it become necessary to reduce the overall level of public
investment or transfer resources to other sectors, highway investments offer
more flexibility with respect to timing and content than does the railroad
investment program. Many individual projects are not interdependent and
postponement of one is unlikely to endanger the benefits derived from
others. Such stretching-out need not conflict with the announced objective
of the National Highway Department to maintain a reasonable year-to-year
stability in expenditures. The local engineering and construction indus-
tries could plan effectively for their own staff development and equipment
purchases within the framework of a sustained stretched-out program.
112.      Urban Transport.   Greater Buenos Aires has the basis for a good
metropolitan transportation system, but a substantial effort needs to be
made to bring this potential to fruition. The system, whtich accounts for
more than half of total passenger traffic in the country, is heavily over-
loaded in some spots, dilapidated and antiquated in others, and the facil-
ities are generally not used efficiently. Some improvements can be obtained
by relatively minor adjustments. Railroad passenger fares on the Buenos
Aires urban services need to be reviewed and revised with the view of avoid-
ing any undesirable shifts in traffic to roads that might result from further
fare increases. A study of the costs incurred on congested roads is pro-
posed to be undertaken; at present, road user charges in Argentina are not
intended to deter congestion. Another study group, reporting directly to
the Secretary of State for Public Works and Transport is now preparing a
transport investment plan for the Greater Buenos Aires area. This plan
will be based on the master plan for the development of the metropolitan
area completed last year and is expected to be ready in the second half of
1971.
113.      A number of deficiencies in the 11 suburban railway lines radiat-
ing from Buenos Aires require attention. Considerable investment Is
1/   Not including provincial and local Government expenditures, urban
transport and possible toll facilities.



- 36 -
required to alleviate grade crossing problems in thie Sarmiento line:   tthis
may involve large-scale planning decisions.   Three other electrified lines
have equipment which is superannuated, though still serviceable. Tthree of
the four narrow gauge lines operate into incoveiniently located terminals,
and conisequently attract relatively little traffic.  The most serious
immediate problem concerns the Roca railway wlhich has two main lines plus
branches: overcrowding is at a level which is not only extremely uncom-
fortable but dangerous as well. Electrification is presently being studied
as a remedy for this situationA as well as a means of obtaining lower operat-
ing costs on heavily traveled sections. There are, however, immediate
measures whichi need to be taken to reduce the overcrowding. These measures
include better schleduling, improvement of transfer arrangements and puslh-
pull operations for local services at Temperley.   Such measures should be
taken at an early date, and well in advance of the availability of the
proposed La Plata Expressway, in order to forestall an irreversible "'ip-
ping" of the transport trend of the region towards private automobiles,
with the attendant higher congestion and operating costs.
114.      The highway system of the Buenos Aires area is far from adequate:
within the capital city itself most streets are quite narrow, and main
arteries are heavily used. A series of avenues parallel and close to the
river front constitute the only high-capacity arteries within the city.
Two high-capacity expressways and a number of other heavy volume routes
impinge on the perimeter of the city, but shortage of capacity for distrib-
uting this traffic within Buenos Mires causes severe congestion at these
gateways. The heavily built-up character of much of the city, however,
makes the direct provision of highway facilities extremely expensive. The
major project currently under consideration is the La Plata Expressway
to be constructed largely in the unoccupied flood plain of the Rio de la
Plata: it would make use of grading and other works which were already
partially completed and left over from an abandoned project for a southern
circumferential access highway. A major part of the cost as projected
wqould be for a high-level bridge over the Riachuelo but there has been no
examination of whether the extra cost would be justified in terms of the
value of maintaining the navigability of the Riachuelo. The route appears
to have been dictated largely by its relatively low cost, and while it
will doubtless be able to attract and generate much more traffic than pre-
sently exists, it will resolve only a very limited part of the problem of
vehicular access to the city. Moreover, the La Plata Expressway is likely
to worsen traffic conditions in the downtown area even if the complementary
"Costera" Expressway is built. Consequently, as much as possible of the
traffic to the downtown area that might be tempted to use the expressway should
be kept on mass transportation modes by improvements to the service of the
Roca Railway and other means.
115.      The authorities have under active consideration investments in
the Buenos Aires subway system. Subway extensions and new subway lines
might prove highly desirable from the point of view of social returns.
They would certainly contribute a good deal to reduction in congestion.
Several alternative plans for the extension of existing subway lines and
construction of entirely new lines are in the discussion stage, but they
are neither sufficiently specific nor are there enough data to permit now
a sound economic appraisal of their respective merits. The ongoing Buenos



- 37 -
Aires Transport Study being carried out by the Secretariat of Public W7orks
and Transport will provide some information which should be utilized by the
same agency to study the feasibility of subway extensions and new lines.
116.      Ports, Water and Air Transport.   The Government port administration,
river fleet, ocean shipping lines and airlines have all improved their
operations and financial performance since 1967. The Government is planning
investments in ports and shipping that will facilitate the great expansion
in foreign trade which is envisaged and save foreign exchange. A new channel
is proposed to be dredged between Buenos Aires and Rosario at a cost of
US$45 million. Government plans also call for investing about US$100 million
over the next five years in improvement and enlargement of a number of
smaller ports as well as some work in the port of Buenos Aires. External
finance is being sought by the Port Administration for part of this program.
Argentina does not have a deep water port which can accommodate heavy bulk
carriers but it is proposed to carry out a feasibility study of such a
project in the near future.
117.      Preliminary Government investment estimates include about US$144
million for purchases of ships by the Argentine state shipping lines during
1970-74 to replace World War II Victory ships. Similarlv, about US$150 mil-
lion are proposed for the purchase of new aircraft by Aerolineas Argentinas
but it is understood that this program is being studied further before
final decisions are taken.
F. Communications
118.      The Government telephone enterprise, ENTEL, needs to resolve two
basic issues if it is to perform satisfactorily its task. These are an
adequate rate structure to its customers and the acquisition of sufficient
equipment on reasonable terms. ENTEL was permitted early this year to
increase its charges for telephone service. The new rates should enable
ENTEL to cover a substantial portion of its investment requirements from
its own cash generation. Another part has been made available by the for-
eign parent companies of the two Argentine manufacturers of telephone
equipment. ENTEL does not thus expect to call on the Treasury for funds
to finance investment.
119.      There are important investment requirements in Argentina's urban,
inter-urban and international telecommunication network. ENTEL has en-
tered into long-term supply contracts with two Argentine manufacturers
of switching equipment. These contracts should provide a domestic indus-
try with a firm basis for planning ahead, which should in turn permit
lower production costs for equipment. Unfortunately, ENTEL will not ap-
parently benefit from those lower costs. This is unfortunate because the
draft development plan now under discussion in Argentina calls for tripling
the previous investment rate in telecommunications to a point where it
would comprise about 8 percent of all public investment. About nine-tenths
of this projected public investment in telecommunications will be spent on
very high cost equipment to automate telephone centrals for large cities
and long distance traffic between cities.



- 38 -
G. Water and Sanitation
120.      Until the late 1950's water supply and sewerage were not serious
problems in Argentina. The three principal cities -- Buenos Aires, Rosario
and Cordoba -- developed in the more humid areas of the country or were
served by important rivers irn drier areas. The drier regions of Patagonia
and Andean Piedmont developed extensive agriculture and light industry,
both of which adjusted themselves to the limited water supplies. Moreover,
most major urban centers had a nucleus of a water/sewerage system which
could be extended without difficulty to meet moderate population increases.
Investment in the sector, however, did not keep pace with the rapid urban
population growth associated with industrialization and urban concentration
that took place after 1World War II.
121.      The proportion of the total population provided with water rose
from 43 percent in 1940 to only 50 percent in 1965, and in the case of
sewer services, a smaller proportion of the population was served in 1965
(23 percent) than in 1940 (25 percent). The present situation is that
about 75 percent of the urban population, which is about 74 percent of
total population, has household water supply and 34 percent has sewer
service. In rural areas, only 6 percent of the population has water sup-
ply -- either in the house or from a public tap -- and sewer service is
practically non-existent. Investment in the sector has shown a rising
trend since 1965 and by 1969 had reached some US$60 million annually.
122.      Two major factors have caused today's shortage of water and
sewer service. First, most system expansions had to be financed by
limited appropriatLons from the federal budget since internally generated
funds were insufficient to finance expansions after covering other ex-
penses -- operation, interest and amortization. Second, the National
Sanitation Institute (OSN) which accounts for about 90 percent of sector
investment, is characterized by institutional rigidity, outdated financial
and managerial procedures and an inability to attract younger personnel
trained in new engineering and administrative techniques.
123.      Other sector problems are inadequate project development, con-
sonant with projected increases in service demand; shortages of skilled
personnel to assess project feasibility, establish priorities, plan and
control finances, design projects and repair and maintain equipment; the
sale of water at a fixed charge, almost always without regard to the
amount of water consumed, and an absence of water meters which would per-
mit charges to more accurately reflect actual water consumption; a complex
rate structure; and the lack of long-range urban master plans for water
and sewer systems.
Present Organization and Necessary Changes
124.      Argentina developed a national institution for water supply and
sanitation relatively early i.n its history.  The National Sanitation
Institute (OSN) was established in 1870 and until 1965 was responsible
for the entire water and sanitation sector. Today it operates largely



- 39 -
in urban areas (towns above 3,000 population) while the Servicio Nacional
de Agua Potable Rural (SNAP), organized in 1965, has responsibility for
water supply to rural communities; rural sanitation is the responsibility
of the Secretariat of Public Health. The Secretariat of Hydraulic Resources,
established in 1969, and to which OSN and SNAP now report, is charged with
long-range planning of all water resources, including both water supply
and sewerage.
125.      Within the last five years, two important instituticnal changes
were made in the sector. First, SNAP was created to develop rural water
supplies. Water is metered and rate structures are designed to cover
operating costs and interest and amortization on loan funds, but not on the
grant portion of capital investment. This program is making modest progress.
Second, the Secretariat of Hydraulic Resources was formed in 1969 for macro-
economic planning of water resources, including water and sewer systems.
However, the Secretariat has not made a clear-cut division of the sector
into rural and urban components and SNAP is currently relending the proceeds
of an Inter-American Development Bank loan at a negative real rate of in-
terest. These loan repayments, used to establish a revolving fund to
finance future expansions, represent a declining amount of purchasing
power because of inflation.
126.      The OSN remains the most important institution in the sector.    It
is responsible for investment policy, the design, construction and operation
of systems, and the setting of rates for urban areas, subject to the approval
of the National Government. At present it is highly centralized in Buenos
Aires zone offices. Modern administrative and financial techniques are not
widely used in OSN and little attention is paid to generating sufficient
revenue to cover operating expenses, to service debt and to finance expan-
sion. Revenues are at present barely covering operating costs. Although
a new and very complicated rate structure, put into operation in Buenos
Aires in 1967, is being applied to systems throughout the country, its
effect on revenues was not analyzed prior to its introduction.
127.      A study aiming at a major reorganization of OSN and initiated on
the basis of outside consulting advice is highly desirable. It would be
desirable to direct organizational changes specifically toward eliminating
the personnel weaknesses known to exist. It would also be desirable for
the Secretariat of Hydraulic Resources clearly to identify the area of
jurisdiction of SNAP for water supply. Unless the Government specifically
designates rural water supply as an area for sector subsidy, it would be
desirable for SNAP to consider an increase in the interest rate on its
loans to rural systems. Without such increases there will be little build-
up of real purchasing power in the revolving fund and a Government subsidiza-
tion of future construction will be unavoidable. A study of the costs and
benefits of installing water meters needs to be made. Experience in Latin
America has shown that generally the savings following meter installation
exceed the costs of installation. Urban master plans for water and sewer
systems are needed for Buenos Aires, Rosario and Cordoba and ultimately also
for medium-sized cities, i.e., those with a population of over one-quarter
of a million. These plans would include both technical and financial aspects
of development.



- 40 -
Public Policies and Programs
128.      The Government's pricing policy for water and sewer service re-
quires critical examination. Since the structure of rates does not produce
sufficiLent internally generated funds to cover all operating costs and fi-
nance some part of systemn expansion, a rate study is needed and OSN be em-
powered to raise rates over time. A few speciaL cases may warrant some
subsidy as it is unlikely that the output of all systems could be priced
at levels which insure covering each systenm's total cost.
129.      In the period 7970-75 the National Sanitation Institute expects
to provide piped water supply to 4.5 million additional customers at an
estimated cost of US$286 million, and sewer service to an additional 7.3
million customers at an estimated cost of US$429 million. All of this
investment is to be concentrated in urban areas, mainly in large urban
agglomerations. By 1974, it is expected that all urban residents will
have access to piped water supply and most (75 percent) would have sewer
service. Of the total investment of over US$700 million, consumers are
expected to provide US$200 million, and the OSN is considering seeking
foreign financing for part of the remainder.
130.      The Government is also planning that by 1976 work should begin
on a large aqueduct system for the center of the country (Grandes Acueductos
del Centro del Pais). This system would transfer potable water from the
Parana and Tercero rivers to parts of the Provinces of Santa Fe, Cordoba,
La Pampa and Buenos Aires (82,000 sq. kms., 77 towns and 559,000 persons)
where ground water sources are high in arsenic and vanadium content. The
project would cost about US$220 million; a preliminary review of the project
suggests that the expected benefits of the project might have been overstated.
H. Education and Housing
Education
131.      The literacy rate in Argentina is about 95 percent which is high-
er than that of most Latin American countries. It also has a relatively
high level of enrollment: 90 percent in primary, 38 percent in secondary
and 13 percent in higher education. The financial burden of public educa-
tion is relatively low -- about 3.8 percent of GDP and 15.4 percent of the
Central Government's budget. This is largely due to low teacher salaries.
The educational system has a high rate of repeaters and dropouts and re-
quires reorientation toward the changing needs of the economy. At present,
conventional secondary schools are oriented exclusively toward unversity
preparation. In addition, there are specialized commercial, technical and
agricultural schools of the secondary type. These specialized schools lead
to the degree of "bachiller" but give only limited access to the universities.
Commercial school graduates are admitted mainly to economic faculties, tech-
nical to engineering faculties and agricultural to agronomic faculties. Ad-
missions to universities are not automatic, even to the above specialized



- 41 -
faculties, since it depends on the quality of the specialized secondary
school. The third type of secondary schools is the normal school which
is responsible for preparing teachers. However, in 1968 admission to these
schools was halted because of the excessive number of potential teachers.
132.      In the 1971-75 period, the Government intends to restructure the
educational system to provide a broader educational base with increased
opportunities and flexibility for the nation's youth. Public investment
in the sector will be increased and the share of GDP going to toth current
and investment costs of education is projected to rise from 3.8 percent
at present to 5 percent by 1975. Several reforms are envisaged. The
present compulsory education period of seven years will be increased to
nine years. The new system will consist of five years of "elemnentary"
school and four years of "intermediate" school. Examinations between the
cycles of 3-2-2-2 and new curricula with practical subjects wlLl be incro-
duced. Under the new system, the dropout rate should be reduced and
career selection by students will be deferred by two years. The present
three-year "secondary1' school (grades 10-12) will be reorganized on a
comprehensive basis, offering academic as well as agricultural, commercial,
technical, etc. streams. Training for primary and secondary school teachers
will be upgraded. In lieu of normal schools, the elementary school teachers
will have, after completing secondary school, a two-year post-secondary
education. An in-service teacher-training program is also envisaged for
the existing teachers. Administration of education will be reorganized
mainly by transferring responsibility for the primary schools to the prov-
inces with commensurate transfer of revenues. In regards to the universi-
ties, the reform envisages an expansion of the faculties of exact sciences
of the provincial universities which will utilize a loan of US$40 million
recently extended by the Inter-American Development Bank. The program
already initiated with the support of the IDB for the expansion and improve-
ment of technical schools will continue. The Government is also seeking
external financial assistance for other educational fields such as secondary
education and teacher-training institutes.
133.      The timely and complete implementation of the educational reform
now being undertaken deserves high priority since it will promote an im-
proved balance between the supply of and need for skilled manpower. The
Bank is presently considering the extension of financial assistance in
connection with the heavy capital investments required by the reform.
Housing
134.      Estimates made in 1963 showed a housing shortage of 2.2 million
housing units. 1/ The aim of the CONADE investment plan is to reduce the
accumulated housing shortage of low income groups by 6 percent by the end
of 1975.  To meet this target, National Government investment in housing
is projected in the CONADE plan to attain a level nearly six times that of
1/   A housing unit is defined as 55 square meters per family.



- 42 -
1965-6'3. This investment would be channelled mainly into low-cost apartment
buildings to serve low income groups at subsidized rents.
135.      In spite of the large increase in housing construction targeted
in the CONADE plan, the role of the National Government in housing will
remain relatively minor in relation to the enormous demand built-up during
the long period of low investment when inflation destroyed the housing mort-
gage market. By far the biggest contribution the Government can make to-
ward overcoming the housing shortage is to persevere in its stabilization
efforts. Success in this area may be expected to revive the housing
mortgage market and shift some expenditures, now directed toward food-
stuffs and automobiles, to housing. These measures will not only provide
the badlly needed improvements in shelter but should also contribute to
strengthening the balance of payments and accelerate the devnlopment of
the Argentine economy. In the case of the low income groups which will
not be able to afford the market rate of interest, Government assistance
in the form of interest subsidies or rent payments may be necessary.
I. Conclusions
136.      The CONADE plan sets out a number of highly desirable goals and
objectives for the public sector as well as for the economy as a whole.
There is little doubt that Argentina is capable of achieveing them. In
order to do so, however, the plan recognizes that public administration
will have to be further strengthened along the lines of the recent past
and in harmony with the development strategy discussed in the previous
chapter. Moreover, particular attention will have to be given to the
specific sectoral issues discussed earlier. The high public investment
goals set by CONADE underscore the need to increase public sector savings
very substantially; even the attainment of more modest public sector
investment goals will depend on placing public finances on a sound footing
as outlined in the next chapter.



- 43 -
IV. FINANCING OF PUBLIC INVESTMENT PROGRAM
A. Public Finances
137.      The implementation of a sustained public sector investment
program both in magnitude and composition along the lines discussed in the
previous two chapters is of fundamental importance to the deveklpment as-
pirations of the Argentine economy. The public sector of Argentina is very
extensive. It is directly responsible for most of transport, power and ,
fuels and tel,ecommunications, as well as for large segments of sanitation,
public health and education. Moreover, the fortunes of both industry and
agriculture will depend to a large extent on the degree of assistance which
they can obtain from the public sector, as well as on the Government's poli-
cies toward them. Over a long period. the Argentine economy has suffered from
an inadequate or inefficient infrastructure brought about by weaknesses in
public finances and public administration. Many steps have been taken during
the past several years to rectify these shortcomings and much progress has
been made. If these advances are to be consolidated and a firm foundation
laid for sustained growth of the Argentine economy, public finances will
have to be modernized.
138.      The reconstruction of the Argentine fiscal system is a major
pre-requisite to achieving sustained economic growth. Public finances have
been seriously weakened through chronic instability, persistent inefficiency
and continuous high rates of inflation. Many efforts have been made to sta-
bilize government revenues, to contain current public expenditures and to
bolster the level of public sector savings to underpin public investment.
These efforts, however, have been repeatedly eroded by changing policies,
weakness of administration and inelasticity of the tax system. A key element
in the Government's stabilization policy inaugurated in 1967 was the strength-
ening of public finances through tax reform, improved tax administration
and reduction in current expenditures. As a result of these efforts and
the improved performance of state economic enterprises, public sector sav-
ings rose from some 1.9 percent of GNP in 1966 to 7.4 percent in 1968.
Slippages began to appear in 1969 and according to preliminary results public
sector savings declined to 6.1 percent of GNP in that year. This slippage
was all the more serious since public investment increased very substantially
and public sector savings, which covered some 99 percent of public sector
investment in 1968, dropped to around 70 percent in 1969.
139.      An analysis of public sector finances during recent years re-
veals both the accomplishments under the stabilization program and the con-
tinuing weaknesses. Largely as a result of the massive devaluation (40
percent) of 1967 and the imposition of export taxes on agricultural products,
national tax revenues rose from 15.5 percent of GNP in-1966 to 18.4 percent
in the following year. At the same time, contributions to the sociaL security
system greatly improved. By far the most impressive performance was that of
the state economic enterprises whose savings rose from practically zero in



- 44 -
1966 to 1.7 percent of GNP in 1968. On the other hand, revenues from in-
come taxes, sales taxes and excise and stamrp taxes registered little im-
provement in real terms. The improvements which took place did not last.
As a result of domestic price increases, export taxes had to be lowered after
1967 so that by 1969 tax revenues had fallen to only 16.6 percent of CNP.
Similarly, the need to keep down costs in the face of rising wages resulted
in a reduction in contribtutions to the social security system.
140.      Thus, not all of the basic weaknesses of Argentine public finances
have been resolved during the recent stabilization effort; this is evidenc.d
by the increased fiscal deficit in 1970 as well as the prospective deficit
for 1971. A major problern of public finances has been the unpredictab-ility
of its behavior and this hias been the chief obstacle to mounting a continuous
program of public sector investment. Although much lhas been acccmiplished
during the past several years in the sphere of pricing by state economiic
enterprises and in increasing the overall efficiency of their operations,
the sale progress has not been achieved in removing two other basic weak-
nesses discussed earlier. Thus, there is no indication that the tax organi-
zation and administration have been adequately strengthened to assure strict
enforcement of tax obligations in the future. Some, but insufficient,
progress has been made in eliminating the reliance on taxes from exports of
agricultural commodities. If Argentine public finances are to provide a
broad and reliable base for the implementation of a sound public sector
investment program, it will be necessary to continue the efforts already
made in strengthening the efficiency and financial operations of the state
economic enterprises. It would also be desirable to eliminate the heavy
reliance on export taxes as a matter of permanent policy.
141.      Improvement in income taxation requires reforms both in struc-
ture and in administration. Although the present system includes a high
degree of progressivity, its inadequate elasticity may be seen from the
fact that even if the 1970 budget had been achieved the income tax would
have yielded little more as a proportion of GDP or total Government revenue
than it did in 1961. The deficiencies include widespread evasion and poor
administration as well as a steady erosion of the tax base as a consequence
of proliferation of exemptions, investment credits, incentive allowances
and otther deductions. It would seem essential that until such time as en-
forcement is substantially improved, further reductions in rates, or the
granting of deductions and incentives -- unless adequately compensated
through other revenue sources -- be avoided. The Government which was in
office prior to June 1970 planned to replace the existing sales tax by a
value added tax in 1971. There is some doubt that present manpower and
automation facilities are adequate to the task of replacing the present
simple sales tax with the complex value added tax, which would apply to
about four times as many tax-payers and require substantial additional ad-
ministrative resources.   While the tax itself is in principle an attractive
improvement over the present sales tax there is serious doubt that the tax
administration has the capacity to implement the change effectively at
this time.



- 45 -
Tax Administration
142.      Deficiencies in tax administration, which result in widespread
avoidance and evasion, remain a major shortcoming in the present tax system.
Evasion of taxes at the Central Government level is estimated by Argentine
authorities to be at least 50 percent of tax liabilities. The problem of
evasion and non-compliance is endemic to most taxes and social security
contributions, with few exceptions, but is most serious in the case of in-
come taxation. It is probably most widespread among the self-employed,
professionals and small- to medium-sized businesses. Compliance is much
better on the part of large corporations and the wage and salary earners
who are covered by the withholding system. Among the methods which might
be considered to improve compliance are the introduction of a standard
assessment of taxable income for persons practicing trades or professions
and whose circumstances are roughly similar, and the use of presumptive
assessments of profit levels on the basis of income indicators on the lines
of the "forfait" system used in many French-speaking countries..
143.      The present deficiencies in tax administration are due to
staff limitations arising out of inadequate supervisory staff, salaries and
training; too high a frequency of change in both staffing and legislation,
resulting in a lack of continuity in programs, administration and the crea-
tion of heavy burdens on both taxpayers and administrators in keeping
abreast of changes; inadequate legislation, including an absence of pro-
visions concerning the penalization of fraud, and a procedures law which
was written in 1935 and is unnecessarily complex; deficiencies in the tax
court resulting in an excessive workload and long delays in processing
cases. The moratorium on tax cases before the court announced in 1970,
which will eliminate many outstanding cases, should open up the opportunity
of reorganizing and expanding the court's capacity to handle the workload;
reorganization of the latter should move in the direction of decentraliza-
tion and the granting of greater appellate powers to the tax administration.
144.      Serious deficiencies in tax administration and enforcement
have compelled the authorities to indulge in emergency and ad hoc measures
suich as the "blanqueo" (whitewash, or legalizing past tax liabilities in
exchange for prompt payment at a very low rate), moratoria on tax debts,
ad hoc real estate taxes and the heavy reliance on export retentions.
The pattern has been one of attacking the long-range problems of the system
with short-term measures. Future changes in the tax structure should empha-
size the economy's long-term revenue needs and should be based on a careful
analysis of the effect of tax changes on economic behavior.
Finances of State Enterprises
145.      Much of the success of the saving effort of the public sector
in the next six years will linge on the performance of the state economic
enterprises. Following an overall consolidated current account deficit in
1966, their savings financed 21 percent of their own investment in 1967 and
an estimated 38 percent in 1970 when the investment level was, in real
terms, more than 60 percent above the 1966 level. This improvement was



- 46 -
largely due to gains in revenue, which increased 84 percent between 1966
and 1969 while current expenditures grew by only 42 percent.    It reflectedl
increases in rates primarily, although gains in productivity and efficiency
as a result of increased utilization of capacity were also contributing
factors. Control of the growth of current expenditures was facilitate(d by
the Government's policy of reducing excess staff; employment in the state
enterprises fell by over 35,000 employees, or 11 percent, between mid-1966
and 1969. The reductions in the excessive labor force in the railways and
the state petroleum corporation were especially marked. These improvements
are expected to continue and considerable reliance is placed on future growthl
of savings in the state economic enterprises.
3. Financing of Public Investment
146.      A consistent and realistic financing plan for the public sector
investment program for the period 1971-75 is presented below. The sources
of financing in this plan cover public sector savings, domestic borrowing
and external capital inflows. A number of assumptions have been made
concerning trends in current tax revenues, in current expenditures of the
Government, in the pricing policies of the state economic enterprises, in
the behavior of the social security system and regarding the impact of all
these factors on the level of public sector savings. Any one of these
assumptions can be changed without detriment to the viability of the plan
provided it is adequately compensated. Thus, if current tax revenues fall
below target, non-developmental current expenditures can be curtailed or
the savings of the state economic enterprises will have to increase more
than projected; similarly, if the authorities decide on a higher level of
public investment than the one postulated by the mission, public sector
savings will have to be raised to a higher level. The degree of flexibility
in the case of the remaining sources of financing -- borrowing internally
and externally -- appears to be much more limited for reasons which are
explained below.
Revenue Prospects
147.      As previously mentioned, considerable progress has been regis-
tered in the fiscal situation since the inauguration of the stabilization
process in 1967. Current revenues of the Central Government increased dur-
ing the past five years by an average elasticity of all tax revenues with
respect to CDP of 1.09 and reached a ratio to GDP of 17.6 percent in
1970 1/. This favorable result was achieved partly through improved admin-
istration and enforcement but largely through the enactment and collection
1/   Elasticity is here defined to include all revenue changes including
those due to changes in tax rates and other structural changes; a more
appropriate term might: be "buoyancy".



- 47 -
of new taxes. To enable the authorities to meet essential current expendi-
tures as well as to sustain a growing level of public investment, the ratio
of revenues to GDP must be maintained at roughly this level during the next
five years. It should be possible to achieve this objective through con-
tinued efforts at improvements in tax administration and enforcement as
well as by means of additional reforms of the tax system since it entails
an overall tax elasticity (buoyancy) of only 1.08, or virtually identical
with that achieved during the past five years.
148.      The revenues of the state economic enterprises, like tax
revenues, increased satisfactorily during the past several years. This in-
crease resulted both from the policy of charging more realistic rates for
services -- transport, electricity, etc. -- and for goods -- gasoline, fuel
oil, natural gas, etc. -- than was the case previously, as well as the
growth of these sales. On the whole, these revenues grew by an average
elasticity of 1.02 with respect to GDP during 1966-70. In many state
economic enterprises the process of "catching up" with inflation and charg-
ing prices consistent with costs and allowing a reasonable return on in-
vestment has been well advanced in recent years, while in others the process
has just begun. The necessity to improve and expand these services by pro-
viding adequate finances for investment, dictates the continuation of the
process of "catching up" by instituting realistic charges for Government
sales of goods and services across the broad horizon of the public sector.
Opportunities for raising revenues are believed to still exist in transport,
especially railroads, fuels and power, water supply and sewage disposal,
telecommunications and in a number of other state economic activities. On
the assumption that the policies embarked upon in recent years will be con-
tinued and extended and that with the support of the massive public invest-
ment program the sales of goods and services by state economic enterprises
will rise in line with GDP, their revenues may be reasonably expected to
increase by an average elasticity of 1.06 in relation to GDP -- a perfor-
mance somewhat better than in recent years. This target should be attain-
able, but in the event of a shortfall, it will have to be compensated for
by greater tax revenues than projected or by economies in current expendi-
tures beyond those now envisaged.
149.       Current revenues of provinces and municipalities increased
most notably in recent years as a result of improved tax administration and
enforcement and are estimated to have reached some 7.4 percent of GDP. It
is assumed that these gains will be maintained and that the growth of pro-
vincial and municipal revenues during the next five years will have an
average elasticity of 1.03 as compared with 1.17 during 1966-70. Any sub-
stantial shortfall will either necessitate economies in non-developmental
current expenditures or a reduction in investments which are estimated to
constitute roughly one-quarter of total public sector investment.
150.      On the basis of the foregoing assumptions regarding current
revenues of the Central Government, the state economic enterprises and the
provinces and mtnicipalities, the growth of public sector revenues during
1971-75 would have an average elasticity of 1.06 to GTP as compared to 1.09
during 1966-70. This appears to be a realistic goal, but by no means an



- 48 -
assured one. As mentioned previously, the satisfactory achieveinents of the
past several years were brought about by a combination of sound tax and
pricing policies and an expanding economy. The achievement oF the current
revenue targets will depend very largely on their continuation. The de-
tailed projections of public sector revenues are contained in Tables 5.27
through 5.30 of the Statistical Appendix.
Current Expenditures
151.      Current non-developmental expenditures of the Central Govern-
ment have traditionally constituted a very high proportion of expenditures
in Argentina because of the large number of employees and the heavy current
transfers to state economic enterprises and Government agencies which were
experiencing operating losses. IW1ith improvements in public administration
and with a growing economy offering more attractive job onpprtunities,
there would appear to be ample room to carry out substantial economies.
These, however, are more likely to be nominal rather than real. The level
of salaries in the public administration is quite low and has been badly
distorted by years of severe inflation. Thus, any realistic attempt to
improve public administration must provide for substantial salary increases
as a continuation of the policy instituted in 1967. Moreover, the public
sector investment program subsumes substantial increases in developmental
current expenditures such as research and extension in agriculture, highway
maintenance, training and education, public health and sanitation, etc.
Taking these pressing needs into consideration, it is unrealistic to expect
any substantial net economies in current expenditures of the Central Govern-
ment. The mission has projected current expenditures with an elasticity
of 0.9R as against 0.94 during 1966-70.
152.      In the case of state economic enterprises, current expendi-
tures have been frequently very high in the past because of excessive man-
power and other uneconomic practices. A part of this situation has been
rectified during the recent past and an expanding economy should make pos-
sible the absorption of many more surplus workers elsewhere. Furthermore,
wasteful practices and poor administration have also been responsible for
high current expenditures. Thus, elimination of these shortcomings would
appear to hold out promise of large-scale savings in current expenditures.
To depend on this, however, appears to be quite unrealistic. The need to
increase salaries in the state economic enterprises in order to attract and
retain competent personnel is even more pressing than in the Central Gov-
ernment administration. On balance, these two tendencies -- reduction in
personnel and increased salaries -- may be expected to largely offset one
another. Furthermore, the increases in sales of goods and services may
also be expected to require some growth in current expenditures. On the
basis of the limited available information, it is difficult to project the
trend in current expenditures. However, taking into consideration all the
foregoing elements and in particular the possibilities of further reducing
wasteful practices, the mission has projected current expenditures to grow
with an elasticity of 0.S4 as against one of 0.79 during 1966-70. rf by
means of better management, their growth can be contained, the need to
raise current revenues of the state economic enterprises will be that much
less pressing.



- 49 -
153.      Current expenditures of provinces and municipalities increased
very substantially in the course of the past several years.    Their increase
was, however, at a slower rate than current revenues, with the result
that their savings have grown considerably. Analysis of the provincial and
municipal current expenditures suggests that as in the case of the expendi-
tures of the Central Government, ample possibilities exist for substantial
economies. On the other hand, the need to raise salaries and especially
to carry out numerous developmental current expenditures in the fields of
agriculture, transport, education, sanitation, public health, etc., will
dictate considerable increases in current expenditures. The mission has
assumed that on balance current expenditures of provinces and municipalities
will grow somewhat slower than their revenues and has projected them with
an elasticity of 1.0 for the next five years as compared to 1.04 during
196 6-70.
154.      Provided current expenditures of the Central Government, the
state economic enterprises and the provincial and municipal governments
behave in the manner projected by the mission, the elasticity of the
overall current expenditures of the public sector with respect to GDT' will
be 0.94 as compared to the projected elasticity of current revenues of
1.06 during the next five years. This rate of growth in current expendi-
tures is somewhat above that of the past quinquennium (0.92) and may be
regarded as quite realistic in terms of the objectives to be achieved.
Although the mission's targets appear to be reasonable, they are only
likely to be realized if appropriate policy measures to upgrade personnel,
increase salaries, reduce wasteful practices and improve management standards
are instituted and carried out, while surplus manpower is eliminated. Un-
less such steps are taken, current expenditures may rise even faster because
of the essential new developmental activities and the general expansion of
public sector activities envisaged. Under these circumstances, the need
for a more rapid growth in public sector revenues than that projected by
the mission will become pressing.
Public Sector Savings
155.      With the growth in current revenues of the Central Government
by some 45 percent and current expenditures by about 40 percent in real
terms as projected by the mission for the period 1971-75, budgetary savings
would increase from 3 to 4 percent of GDP and would rise from 17 to 22
percent as a ratio of revenues.   At the same time, the savings of the state
economic enterprises would increase from 1.5 to 2.0 percent of GDP. Only
in the case of provincial and municipal governments are savings assumed to
remain a constant proportion of GDP, at about 1.4 percent of the latter.
If these projected targets are realized, public sector savings as a whole
should rise from 6.0 percent of GDP in 1969 to about 7.2 percent in 1975.
In real terms, public sector savings would grow from $a 4.2 billion in
1969 to $a 6.9 billion in 1975, or by nearly two-thirds. The share of the
projected public investment level financed by public sector savings would
increase under these assu-mptions from some 70 percent in 1969 to about 80
percent by 1975.



- 50 -
Financing Plan
156.      If public sector savings grow along the lines outlined above,
they would finance on the average some 77 percent of the projected public
investment program in the period 1971-75. In addition, the public sector
should be able to borrow domestically a part of the additional resources
needed. Because of the resumption of the inflationary pressures during
the past 18 months, it has become increasingly difficult for the Govern-
ment to borrow internally net financial resources outside of the banking
system and it does not appear realistic to expect any substantial change
in this situation until inflationary conditions are brought under more
stringent control than currently prevails and positive interest rates are
reinstituted; in May 1971, the Government was understood to be considering
the use of indexed Treasury bonds.   On the other hand, it should ,e possible
for the public sector to borrow internally from the bankinb system roughly
the same absolute amount in real terms annually during 1971-75 as this year.
This level of internal borrowing by the public sector from the banking
system appears to be broadly consistent with the Government's other objectives
of decelerating inflation, stimulating sustained growth and raising real
wages. The exact amount of internal borrowing by the public sector will
have to be determined on the basis of annual financing plans with due regard
to the credit needs of the private sector. However, the amounts suggested
above appear to be consistent with overall private sector credit expansion
annually on the order of 5 percent in real terms.
157.      With public sector savings and internal borrowing behaving over
the period of the next five years in the manner indicated above, a need for
net external capital inflows in the amount of $a 3,765 million (in 1969 pesos)
(US$1,075 million) to fill the public sector savings investment gap is envis-
aged. Of this total, about $a 2,664 million (US$761 million) or 70 percent
can be covered by draw-downs on loans now in the pipeline. The remainder
($a 1,101 million or about US$315 million) would have to come from loans
still to be contracted (see Tables A and B). This should prove manageable
for reasons explained below.
158.      The total projected public sector investment program during 1971-
75 amounts to about $a 38.6 billion, or the equivalent of approximately
US$11 billion. It appears that a rather high proportion of this program --
about 55 percent -- is "projectizable". Thus, some $a 21.3 billion is "pro-
jectizable". The foreign exchange component of the "projectizable" portion
is estimated at roughly one-third and is equivalent to $a 7.2 billion (US$2.1
billion).
159.      What essentially emerges is that if the composition of the invest-
ment program remained unchanged and external lenders financed only the for-
eign exchange component of the "projectizable" portion of the public sector
investment program, the savings/investment gap of the public sector could
be covered. The problem of filling the financial requirements of the
Argentine public sector through external capital inflows linked to projects
lies not in covering the savings/investment gap, but elsewhere. As the
attached table indicates (Table B), in addition to filling its investment



Table A: FINANCING OF PUBLIC SECTOR INVESTMENT PROGRAM, 1971-75
(In million U.S. dollars)
Projectizable with External Financing
Existing  Loans            New Loans                Total
Total        Non-Pro-      Develop-               Develop-                Develop-
Investment    jectizable       ment,                  ment                    ment
Program      Investment     Agencies  Suppliers    Agencies   Suppliers    Agencies   Suppliers
External Financing             2,299           154           329       432          593        791          922       1,223
(Foreign Exchange
Component)               (2,061)          (-)          (304)     (432)        (534)      (791)        (838)     (1,223)
(Local Currency)            ( 238)          (154)         ( 25)      (-)         ( 59)       (-)         ( 84)      (-)
Domestic Financing             8,736         4,807           467       741         1,135     1,587        1,602       2,328
(Foreign Exchange
Component)               ( 240)        ( 240)           (-)       (-)          (-)        (-)          (-)        (-)
(Local Currency)            (8,496)       (4,567)         (467)     (741)      (1,135)   (1,587)       (1,602)     (2,328)
Sub-Total                                               796     1,173        1,728      2,378        2,524       3,551
GRAND TOTAL              11,035         4,961              1,969                   4,106                   6,075
Source: Mission estimates.



Table B:    PUBLIC INVESTMNT AND FINANCING, 1969-70 AND PROJECTED 1971-75
(In millions 1969 pesos)
Average    Percentage of Public
Average             Investment
1969       1970a/         1971     1972      1973      1974       1975        1971-75         1969         1975
I.  Public IrivesUwent                    132     6 513          6 665     7 358     7         87A  R 190  R 640       7,725           100.0       lOn
Fixed     b                      5.818      6,o66          6,304    7,008     7,413     7,849       ,290         7,373           9-9_
Financial-                         314        447            361       350      350        350       350           352             5.1         4.1
II.  Investment/GDP, %                       8.7        8.9           8.6       9.0       9.0       9.0        9.0          8.9
III.  Public Savings                      4 227     5 213          4 816     5,675    6 154      6 503     6 895         6 009            68.9        79.8
Central Government               2m         2              2m5 9    3,171    X3,39        m                                                    m324.6
State Enterprises                1,160      1,133          1,228    1,399     1,621     1,74i      1,886        1,575            18.9         21.8 8
Provinces                          943      1,407          1,039    1,105     1,174     1,247      1,325         1,178           15.4         15.3 ~
IV. Capital Income                         535       298            435       300       3°°       300        300          327             8.7         3.5
V. Financing Gap                        1,370       1,002        1,4       1,383    1,309      1,396     1,445         1,389            22.4        16.7
VI. Net Domestic Borrowing2/             1 457       828            670       684      694        607       527           636            23.8         6.1
(% of GDP)                         t2.1)      -7.1)          70.9)    70.8)     70.8)      70*7)     70*5)         X7)
VII.  Net Foreign Borrowing               -  87        174           743       699      615        789        918          753           - 1.4        10.6
Gross Borrowing         1,089            1,T4               77      1,2        74  5               1,60          1,609           17.7         19.3
Amortization                    -1,176     -1,266         -1,002      -729     -970       -832      -752          -857          -19.2         -8.7
a/ Preliminary estimates for investment and provincial savings.
b/  Including State Enterprises.
c/  Includes credits to public sector from Central Bank, mortgage institutions, BIRA, CNAP and operations under circular 618.
Source:   BCRA, Ministry of Econonm  and Labor and Mission Projections.



- 53 -
requirements, the Argentine- public sector has to meet heavy external debt
amortizations. During the period 1971-75, these are estimated to average
$a 857 million annually (US$245 million) or a total of $a 4,285 million
(US$1,225 million) for the five-year period. Taking these amortization
needs into account, together with those for covering the savings/knvestment
gap of the public sector investment program (see paragraph 157 above), a
total of US$2,300 million of external resources is required. Since the
projectizable portions of the public sector investment program have an es-
timated foreign exchange component of US$2.1 billion, the total financial
requirements of the public sector would not be met under circumnstances
where external lenders limit their financing to the foreign exchange con-
tent of the projects. An unfilled gap of around US$240 million would
emerge during the period 1971-75.
160.      It would thus appear that the financing plan of the public sector
(including external debt amortization payments) could only be successfully
carried out if external lenders in addition to financing the foreign exchange
component also include some local currency financing in their project loans.
If the development agencies finance on the average about 10 percent of local
currency in their new project loans as against 7.5 percent in the past, some
US$60 million could be covered. With US$25 million of local currency fi-
nancing already associated with development agency loans in the pipeline,
the remaining gap will have to be filled through external bond flotations
of approximately US$150-155 million.
161.      The above assumes that external lenders do not set a ceiling to
their participation in individual projects below their foreign exchange
components. Since quite a few of the larger projects (investments in air-
planes, petroleum refineries, ships, etc.) embody such a large proportion
of foreign exchange -- some up to 100 percent -- external lenders reputedly
choose to finance only a portion of these foreign exchange costs. In other
instances where the size of a loan would become larger than lenders are
disposed to finance if they were to cover the entire foreign exchange cost,
the loan on occasion covers less than the foreign exchange component (e.g.,
the Bank loan to the railroads). Should such instances become significant,
and there are some indications to this effect, they in fact could lead to
a situation where the transfer of external capital on a project basis could
fall even further below requirements. Under these circumstances and in
order to fill the shortfall, external lenders might be called upon to cover
some additional amounts of local currency in projects where the foreign
exchange component is quite low or where the lender's contribution to the
total project cost would be relatively small unless a portion of local
currency costs were included. Another possible need for local currency
financing may arise elsewliere. The foregoing estimates of the "projectizable'
portion of the program may prove to be too high as some now contemplated
projects fall by the wayside and are replaced by "non-projectizable9r public
investments. Should this occur, the estimated foreign exchange component
would most likely decline appreciably and additional local currency financing
would become necessary to transfer the requisite external resources. This
could be met alternatively through increased bond flotations abroad or a
larger portion of local currency financing in project loans.



- 54 -
162.      The projected financing plan for the public sector for the
period of 1971-75 is predicated on a heavier reliance on domestic resource
mobilization than in the past. This is quite consistent with the pattern
which emerged since the stabilization of 1967. The contribution of public
sector savings to public investment would increase from about 70 percent in
1969 to 80 percent in 1975 when the absolute level of investment in real
terms would be some 40 percent higher and the ratio of public sector savings
would rise from 6.0 to 7.2 percent of GDP.



- 55 -
V. BALANCE OF PAYMENTS
A. Past Experience
Current Account
163.      Argentina's balance of payments has experienced continuous strains
as a result of the frequently conflicting domestic policies which proved
inimical to both exports and growth. Since the latest stabilization effort
was launched in 1967, the growth of the economy has been associated with
large current account deficits in the balance of payments. These deficits
represented a reversal of the experience during 1963-67 when substantial
surpluses were achieved and in fact resources were transferred abroad (in
terms of net exports of goods and non-factor services) at the rate of about
US$285 million annually. The current account deficits during the past three
years resulted in part from the very substantial increases in imports
associated with economic expansion, but also from the rapid growth in
interest payments and profits remittances abroad. To cover these current
account deficits and make amortization payments on external debt, substantial
inflows of external capital were required during 1968-70. These inflows
averaged US$630 million annually with nearly three-fourths going toward
amortization payments on external debt, the bulk of which was public debt.
The dominant factors in the Argentine balance of payments during the past
decade have been the relatively sluggish growth in exports, the heavy burden
of external debt service payments and the consequent need periodically to
restrict imports to a level well below the growth requirements of the
economy.
Exports
164.       The principal limitation on the growth of imports has been the
comparatively slow rate of increase of Argentina's traditional commodity
exports. In recent decades Argentine farm exports -- mainly livestock
products, maize and wheat -- have not kept pace with the growth in world
trade in agricultural products. The extent of failure of exports to
grow in line with world demand is demonstrated in the table below:
ARGENTINE SHIARE IN WORLD EXPORTS, 1954-66
(Percentage)
1954/56        1959/61        1967/68
Beef                                       32              31             20
Corn                                       21              20             13
Wheat                                      13               16             4
Wool                                        9               10             9



- 56 -
Among the main reasons for the slow growth in exports during much of the
past two decades was the sluggish growth in production due to the low prices
received by producers of basic commodities who were simultaneotusly faced with
high cost manufactured inputs. Moreover, an overvalued exchange rate during
much of the period, combined with export taxes, served as a disincentive to
exports of the major agricultural products.
165.      Four commodity groups -- meat, industrial products, feed grains
and fruit -- accounted for 77 percent of the US$424 million increase in
exports between 1960-61 and 1967-68. Meat accounted for 40 percent, manu-
factured products for 15 percent, maize and sorghum for 12 percent, and
fruit for 9 percent of the overall increases. Between the beginning and the
end of the 1960's, the value of beef and maize exports increased as a result
of increases in both volume and unit value of exports.    However, the value of
other major exports exhibited only modest growth or in fact declined during
the decade. Thus, the value of cereal exports, other than maize, rose
moderately as a consequence of an increase in the volume of wheat and sorghum
exports. The value of hides and skins exports showed little change. Receipts
from wool exports declined materially, reflecting drops in volume and
especially unit value. Receipts frori exports of industrial and other products
grew significantly during the period, contributing to the modest growth in
overall exports between 1960 and 1970 of about 5 percent annually. In 1969
and 1970 the growth in merchandise exports was quite marked, with livestock
and especially feed grains exports experiencing a considerable increase.
The increase in value of feed grains sales reflected the confluence of
several important developments: strong world prices, large increases in
acreage, and very favorable harvest conditions.
166.       Except for the atypical 1969-70 biennium, the growth in earnings
from major traditional exports in the past decade has been unimpressive.
The only clear-cut cases of significant increases in export volume have been
maize, a major export, and sorghum, until recently a minor one; it is unclear
whether the increase in volume of beef exports can be regarded as more than
a temporary phenomenon. The increase in unit value of beef exports reflects
the recent encouraging shift: in the composition of beef exports in the
direction of more processed, high-valued items; thus, cuts and other pro-
cessed meats contributed 47 percent of the value of beef exports in 1967-69,
as against only 25 percent in 1963-65. Since 1965, therefore, the agricul-
tural sector as a whole has exhibited only a modest capacity to expand the
volume of its exports.



- 57 -
CHANGES IN VALUE, VOLUME AND UNIT VALUE OF MAJOR EXPORTS,
PROJECTED TO 1975
(1968-69 = 100)
Item /1                           1960-61       1964-65       1975
Beef (19):           Value                      59           92           175
Volume                     79          101           136
Unit Value                 75           91           129
Maize (11):          Value                      62           96           208
Volume                     62           89           180
Unit Value                 99           109          116
Wheat (9):           Value                      75          222           102
Volume                     75          218           121
Unit Value                102          104            84
Sorghum (3):         Value                      16           43           400
Volume                     18            44          443
Unit Value                 93           96            90
/1   Number in brackets is proportion of total exports in 1968-69.
Source:   IBRD staff.
Imports
167.      The relatively low level of Argentina's imports--less than 8 per-
cent of GNP since 1963--in part reflects the effectiveness of the high
import duties referred to earlier. Imports, and especially impcorts of
intermediate goods, in fact play a central role in Argentine economic
activity because of the very large size and economic importance of the
country's industrial sector. In recent years, intermediate goods accounted
for two-thirds of total imports and amounted to about one-fifth of value
added in manufacturing. Moreover, while Argentina has a relatively developed
capital goods industry, it must still import a considerable volume of invest-
ment goods; capital goods account for over one-fifth of total imports and
represent about 20 percent of investment in machinery and equipment. Con-
sumer goods, effectively excluded by high import duties, amount to less than
5 percent of imports.
168.      While imports have been deliberately restricted as a matter of
Government policy in order'to promote the development of domestic manufac-
turing industry, their expansion has, at the same time, had to be curtailed
by the slow growth in export earnings in most of the past decade. This has
resulted from a heavy reliance on a relatively small number of export
products, the supply of which has grown slowly because of Government policies



- 58 -
affecting production and export incentives, as a result of frequent year-to-
year variations in agricultural exports due to vicissitudes in world prices,
or fluctuations in output due to weather. Commodity imports have, moreover,
had to be restricted because of the comparatively heavy weight of accumulatcd
debt witlh a corresponding need to devote a considerable part of foreign ex-
change availabilities to meet debt service payments and because of periodic
large-scale speculative outflows of short-term capital.
169.      Imports in Argentina have had strong cyclical fluctuations,
reflecting on the one hand attempts to raise the growth rate and on the
other the implementation of policies to overcome the balance of payments
crises experienced on account of shortages of foreign exchange. The rapid
rise of imports during 1959-62 was almost entirely due to the sharp rise of
investment activity in the mining, metal and automobile industries. After
1962 and until mid-1967, imports stagnated around the level of US$1.0 bil-
lion, reflecting the sluggish investment activity as well as the high costs
imposed by surchages on intermediate goods and direct controls over the
importation of capital goods. With the removal of these controls following
the massive devaluation (40 percent) of 1967, imports increased by almost
7 percent in 1968, about 33 percent in 1969 and 9 percent in 1970. The
recent recovery of imports of capital and intermediate goods was the result
of improved economic activity and outlook; the removal of financial restric-
tions; the impact of the reduction of tariffs; exchange rate speculation
after mid-1969, and probably some building of stocks.
Capital Account
170.      Argentina was a net exporter of capital in the amount of US$120 mil-
lion annually during the period of 1962-66. This trend was reversed from
1967 through 1970. The size of the annual inflow varied widely during this
latter period from as little as US$17 million to as much as US$471 million.
The bulk of these inflows was required to sustain a high level of imports
while continuing to meet large external debt amortization payments, which
averaged US$426 million. In three of these years, capital inflows covered
current account deficits which ranged in size from US$82 million to US$285
million. During most of the period, the substantial capital inflows also
made possible large reserve build-ups. In 1969 a pronounced reserve loss
took place; this phenomenon was typical of the recurrent pattern of capital
flight and capital repatriation which have for many years marked the ebb and
flow of confidence in the Government's stabilization and exchange rate policies.
171.      Capital inflows during 1967-70 were, in decreasing order of
importance, public and publicly guaranteed loans, including large volumes of
suppliers' credits; private long-term capital; import financing; and private
direct investment. The bulk of the inflows--averaging US$370 million annually
--took the form of public and publicly-guaranteed medium- and long-term
capital, some US$362 million of which was needed to finance amortization
payments on public external debt. In three of the four years, there were,
in addition, very substantial inflows of private capital. While a part of
these inflows served to cover amortization on private external debt, these
were far smaller than public debt amortization payments. Recorded private



- 59 -
direct investment flows were quite small, averaging only US$9 million, and
well below the level of the previous quinquennium. Lastly, in several recent
years there were moderately large capital inflows in the form of import
financing associated with higher import levels.
B. Prospects
172.      Argentine economic development in the next five years, as in the
past, will depend to a large degree on the availability of a rapidly growing
and reasonably stable supply of imports. The principal balance of payments
issues facing Argentina, if her economy is to secure the imports necessary
for an adequate and sustained rate of economic growth, are her ability to:
(a) implement the policies needed to achieve a substantial increase in exports,
especially exports of beef and feed grains; (b) greatly improve her capacity
to prepare high priority public investment projects suitable for external
financing; and (c) secure external capital on reasonably favorable terms
by carrying out economic policies which will assure a favorable credit
standing abroad.
Export Growth
173.      Past Argentine experience has demonstrated vividly the importance
to a vigorous growth in exports and a healthy balance of payments of a stable
domestic economy and effective and consistent Government policies vis-a-vis
the agricultural community and the foreign trade sector. Any projection of a
significant rate of export growth must assume adequate export incentives,
including a realistic and flexible exchange rate policy. Export incentives
would undoubtedly be improved by the permanent elimination of export taxes
on beef (that were temporarily abolished in late 1970) and their replacement
by other sources of fiscal revenue, as outlined in the previous chapter.
The expansion of livestock exports requires a revitalized environment offering,
in the first instance, increased incentives to production. The measures
necessary to achieve these objectives of increased exports include, not only
permanent elimination of export taxes, but change in the Argentine consump-
tion pattern to permit a shift of supply of beef from the domestic to the
export market, and adequate and stable terms of trade to livestock producers.
The practice of maintaining wide margins between world market prices and
prices paid to the producer has had the effect of holding consumer prices
substantially below the world price equivalent. Export taxes have induced
domestic consumption at the expense of exports, particularly in the case of
beef. At the present time producers of non-traditional exports benefit from
a generally attractive system of incentives, including bonuses, tax benefits,
protection and export credit as well as export insurance. It should, however,
be pointed out that the present system of compensating exporters for duties
paid for imported raw materials does not adequately reflect the additional
costs incurred as a result of purchases of high cost domestic inputs which
result from the country's high level of tariff protection. Consideration
should be given to the desirability of remedying this defect in an otherwise
attractive incentive system and of securing the additional revenues required
to meet the fiscal burden of compensating for these added costs.



- 60 -
174.      Provided measuIes are taken to institute adequate export incentives,
the dollar value of exports could increase by 6 percent annually during 1971--
75. Exports of cereals could grow at a rate of around 7.9 percenit annually,
with wheat exports increasing moderately and exports of maize and sorghum
increasing substantially. The estimated rate of increase of meat exports
for 1971-75 is about 7.2 percent per year. Most of the growth in export
earnings from meat will result from higher prices and from increased exports
of high-value processed meats. The basic assumptions underlying this
analysis are that domestic consumption will grow by about one percent and
export availabilities by 2.5 percent annually and that necessary improvements
in health and sanitation conditions will be implemented.
175.      The value of exports of hides and skins is expected to grow 2.5
percent per year, with a small increase in the volume of exports and higher
value added. The estimated 2.0 percent annual rate of grow h for wool ex-
ports will arise from increased internal processing. Despite the anticipated
decline in vegetable oil prices, exports of vegetable oils and their by-
products could grow at 3 percent per year due to increased demand for oil
cakes. The growth in exports of temperate-zone fruits is expected to reach
about 16 percent per year, with the bulk going to Brazil. Manufactured
exports, which were negligible prior to the 1960's, have increased very
rapidly in recent years -- a tribute to the Government's success in pro-
moting non-traditional exports; they are estimated to increase by 9.4 per-
cent per year (see Tables 3.9 and 3.10).
176.      According to the above estimates, three commodities -- beef, maize
and sorghum -- will be the principal factors contributing to increased ex-
port earnings, together accounting for two-thirds of the growth of earnings.
The heavy reliance placed on these three products gives increased urgency
to the need to tackle the problem of beef exports; the implementation of
the program proposed elsewhere in this report becomes essential for the ful-
fillment of the export targets. Maize exports could benefit greatly from
better grading and marketing which would result in improving export earnings.
The projected growth of industrial exports will require additional promotion
measures, but in the longer run, given an appropriate exchange rate policy
and access to credit and other incentives, Argentina's broadly based industry
and her comparative advantage in processing agricultural inputs hold out the
promise of being a dynamic component of growth in export earnings.
Import Requirements
177.      If a GDP target of 5.5 percent annually is to be achieved imports
will have to grow from a level of US$1.7 billion in 1970 to around US$2.2
billion in 1975.    From the standpoint of long-term development strategy it
would be desirable to permit a more rapid rate of import grwoth as an inte-
gral part of the process of (1) exposing domestic industry to foreign com-
petition, (2) correcting presently distorted price relationships and
consumption patterns, (3) improving the terms of trade of agriculture, and
(4) in general achieving a more effective use of the country's resources.
Analysis of Argentine growth since the early 1960's suggests that growth in
GDP requires a nearly proportional expansion of imports. A growth rate



- 61 -
higher than 5.5 percent annually will thus necessitate a more rapid expan-
sion of imports than is here projected. However, the attainment of such a
higher rate of import growth will be very difficult in the next five or six
years if the Government is to achieve its desire to reduce the burden of
external debt service.
178.      It is extremely difficult to make meaningful quantitative projec-
tions of the likely levels of imports in Argentina. The best that can be
done is to make a notional projection of the likely overall levels and adjust
this by probable policy changes. At the heart of the problem is the fact that
Argentina has not had a stable economy and the data on the external accounts
are dominated by frequent and sharp devaluations, control on imports and
massive swings in the flows of financial capital. Argentina's economy has
experienced continuous disequilibrium and over the period for which informa-
tion is available there has been no mechanism for assuring continuous adjust-
ment of the external economy to the changes in the internal one. Hopefully
the new policy of systematic exchange rate adjustment will provide a basis
for movement in that direction.
179.      Imports have been projected by calculating the available external
resources (capacity to import) from exports and foreign capital flows, and
also by using a rough elasticity of imports with respect to output (based
on the varied experiences of the 1960's) and calculating a notional level
of demand. Both procedures give roughly similar results at the rate of
growth postulated for the economy of 5.5 percent per annum; thus, the
elasticity of imports with respect to output is calculated to be slightly
less than unity and at the projected level of net external resource availa-
bility a 5.5 percent rate of growth GDP produces an implied elasticity of
slightly less than unity. Thus imports are projected to grow at an annual
average rate of 5.3 percent between 1971-75 while GDP is projected to in-
crease at 5.5 annually. A possible distribution of imports by major cate-
gories is set forth in Table 3.13 of the Statistical Appendix. This has
been calculated from the shares implied by the CONADE plan but at levels
compatible with 5.3 percent annual growth in imports rather than the 10.3
percent implied by that plan.
180.      Underlying the import estimates is the expectation that capital
goods imports will have to grow more rapidly than fixed investment, as a
consequence of the expected rapid expansion in such industries as steel,
transport, petroleum, petrochemicals, newsprint and basic metals, all of
which have a high capital goods import content. Intermediate goods imports
would grow somewhat less rapidly than manufacturing output while imports of
consumer goods, by far tho smallest category of Argentine imports, will grow
more slowly than consumption, on the assumption that a very large part of
the increase in demand can be supplied by domestic enterprise. The estimates,
which are based on the behavior of imports during the 1960's, take into
account the Government's plans to increase the production of steel, chemicals,



- 62 -
papers, cement and other products. The estimates could prove to be somewhat
conservative given the difficulty of gauging the effects on imports of future
tariff liberalization and increases in income and economic activity such as
those experienced in the 1968-70 period. The attainment of the required
increase in imports will hinge principally on two factors, the ability of
the economy to expand its export earnings in 1971-75 at a rate of about 6
percent per year so as to reach a level of US$2.3 billion in 1975 (compared
with US$1.8 billion in 1970), and on the country's ability to secure a large
volume of external capital on reasonable terms.
Current Account Gap
181.      The deficit on current account is projected to increase moderately
in the next five years. This is due to a substantial increase in factor
payments which more than offsets a continuing increase in outflow of re-
sources (balance of goods and non-factor services). Thus, while non-factor
service payments and receipts are projected to increase by approximately the
same amounts, merchandise exports, as discussed earlier, are projected to
grow more rapidly than imports during 1971-75, resulting in a resource out-
flow by 1976, as contrasted with a resource inflow in 1971. The projected
increase in the current account deficit results in part also from the fact
that profit remittances are expected to increase moderately, but mainly
from the indications that interest payments on public and publicly-guaranteed
debt are going to rise considerably over the period.
External Capital Requirements
182.      On the assumption that efforts to increase export earnings as
discussed above are successful, the financing of the level of imports
necessary to achieve a 5.5 percent level of economic growth, while meeting
other claims on foreign exchange, will necessitate a gross capital inflow
in 1971-75 of approximately US$3.7 billion, or about US$742 million a year
on the average. Of this total, US$447 million annually will finance external
debt amortization (public and private) and US$295 million the current account
deficit. The problem of external capital requirements posed by the need
to service existing debts is highlighted by the fact that amortization
payments on already existing debt alone will absorb some US$333 million
annually. The details are contained in the table below.



- 63 -
SUMMARY BALANCE OF PAYMENTS, 1969-1975
(in millions US dollars)
1971-75
1969     1970      1975     Total    Average
USES
Required gross capital inflow    710       706      813     3,708        742
Deficit on current account    -285      -235     -307    -1,474       -295
Goods and n.f.s. balance   (- 60)   (- 18)      (30)  (     4)     (_ 1)
Interest                   (-115)   (-146)    (-229)  (-  980)     (-196)
Profit remittances         (-107)    (- 68)   (-104)  (   470)     ( 94)
Net transfers              (-  4)    (   3)   (   4)  (    19)     (   4)
Amortization of medium- and
long-term debt              -425     -471      -506    -2,234       -448
Change in reserves and/or
short-term capital
movements                   -268       177       -         73         15
SOURCES
Inflows of gross capital         442       883      813     3,780        756
Private direct investments      13        11       30       131         26
Gross borrowing                429       872      783     3,649        730
Loan disbursements          (446)     (561)    (783)   (3,598)      (720)
Short-term credit           (-17)     (311)    ( - )      (51)       (10)
183.      The sources for covering the above capital requirements consist
very largely of medium- and long-term credits and direct private investment
as indicated in the table above. The discussion in the preceding chapter
demonstrated that the external financing requirements of the public sector
during 1971-75 are estimated at US$2,300 million (see Chapter IV, para. 159).
This amount could be transferred by meeting the needs of the "projectizable"
portion of the public sector investment program. Capital inflows through
direct private investment are estimated at US$130 million. The balance
of the external capital requirements -- US$1,270 million annually -- may be
expected to be fillecd through capital inflows to the private sector in the
form of suppliers' credits (guaranteed or unguaranteed), financial loans
and credits, financing of imports and through borrowing for Government
financial institutions by sales of Government bonds abroad.
184.       In order to achieve annual disbursements on external loans and
credits of US$720 million as indicated in the table below, new loan commit-
ments rising from US$660 million in 1971 to US$800 million in 1975 will be
necessary. Of these commitments, an amount roughly equivalent to the first
year's disbursements is already in the pipeline. Slightly less than one-
half of pipeline would come from multilateral agencies.



- 64 -
COMMITMENTS AND DISBURSEMENTS OF MEDIUM- AND LONG-TERM CREDITS, 1971-75
(in millions of US$)
Total
1971   1972   1973    1974   1975   1971-75
___________________________ _            (billions)
Commitments                       658    686    793     795    801      3.7
Loans from multilateral
agencies                       248    237    253    253     253      1.2
Medium-term suppliers'
credits and bonds              410    449    540    542    548       2.5
Disbursements                     680    633    745     757    783      3.6
From existing loans,
Dec. 1970                      244    211    162     146     28      0.8
From new loans, January 1,
1971                           436    422    583    611    755       2.8
External Public Debt /1         2,087  2,303  2,507   2,748  3,015
/1   Public and publicly guaranteed.   Disbursed at end of year.
Source: IBRD staff.
External Debt Management
185.      In the past there has not been an adequate inflow of long-term
credits. Long-term official loans accounted for only 7 percent of total
external credit utilization during the period 1960-69. The rest came from
suppliers, private financial institutions and bond issues in the international
capital market. In recent years substantial improvement has been made by
Argentina in obtaining long--term loans. In December 1969, about 13 percent
of the outstanding debt was in the form of long-term project loans from
international lending institutions; this compares with 9 percent in 1967 and
about 7 percent in 1964. It is assumed in our projections that by 1975 the
proportion of long-term project loans to outstanding disbursed public and
publicly guaranteed debt will increase to about 40 percent. To accomplish
this objective, it will be necessary to shift a large proportion of public
sector borrowing from suppliers' credits and commercial bank loans to institu-
tions providing long-term credit. The nature of the projects for which
Argentina is contemplating external financing is such that this appears to
be attainable.
186.      As was noted earlier, one of the objectives of Argentine policy
over the near- and medium-term should be an improvement in its debt profile.
Some improvement has already taken place in the last few years, the public
debt service ratio declining from 27 percent of goods and services in 1968
to an estimated 21 percerLt in 1970. However, the debt structure continues



- 65 -
to be very unfavorable; at the end of 1969, nearly half of the public debt
had to be repaid within three years. This position reflects the heavy
build up of short-term suppliers' credits in 1968 and 1969 as well as larg-e
bond placements and credits in 1967 and 1968 which carried very short
maturities. An important objective of debt management policy should be
to effect a 3hift away from short-term borrowing towards increased reliance
on medium- and long-term credit on favorable terms. It would be highly
desirable to institute a procedure for systematic monitoring of contracting
external debt obligations in the future, particularly as related to the
public sector.
187.      If Argentina manages to successfully borrow the estimated capital
requirements, an increase in the outstanding external debt of about US$990
million, or 38 percent, will take place over the 1971-75 period. At the
end of 1975, the total debt would be around US$3,590 million compared with
an estimated US$2,600 million at the end of 1971. Nevertheless, the rise
in exports, combined with a substantial improvement in the average term of
new borrowing, would permit an easing of the debt service burden in the
balance of payments. The public and publicly guaranteed debt service ratio
would decline from an estimated 21 percent in 1970 to about 17 percent in
1975.
188.      Argentina's creditworthiness has at times suffered in the past
because of serious economic difficulties brought about by chronic inflation,
slow growth of export earnings and balance of payments crises. On three
occasions, the debt service burden proved unmanageable and external obliga-
tions were negotiated. Given the already heavy external obligations and
the projected large external capital requirements, the management of the
external debt is likely to remain a difficult task for some time to come.
The likelihood of being able to instill confidence on the part of the
creditors and to secure the required large scale capital inflows is
predicated on Argentina's ability to convince external creditors that the
improvement in economic and financial management policies will endure over
the long-term. If Argentina takes the necessary measures discussed in this
report, especially with reference to increasing public sector savings,
abolishing price discrimination against exports, and maintaining a realistic
exchange rate, and thus achieves internal stability and viability in her
balance of payments, she should be able to manage her external debt service
obligations while pursuing a satisfactory growth rate of the economy.
External Capital Requirements and Growth
189.      As noted earlier, on the assumptions regarding economic growth
and foreign trade described in the preceding pages, gross external capital
requirements would amount to some US$742 million on the average during
the 1971-75 period, reaching US$813 million in 1975. The net capital inflow
at that time, after allowing for amortization payments on external debt
would, however, amount to only US$307 million. (See table below, Case I).



- 66 -
190.      If the economy should develop according to the assumptions con-
tained in the draft CONADE development plan, external capital requirements
by 1975 would be considerably lower. As may be seen from the table (Case II)
although imports would be considerably greater than. assumed in the mission's
analysis, the much higher level of exports projected in the CONADE draft
plan would result in an external capital requirement by 1975 of only US$627
million. Moreover, the outstanding external public debt would be considerably
lower and the service ratio on public external debt much lower. If, however,
it is assumed that imports increase at the rate necessary to achieve the
growth in GDP projected in the CONADE draft plan but that exports increase in
line with the mission's projections, the result would be an external capital
requirenment by 1975 of US$1,300 million. The outstanding public external
debt would reach US$3.2 billion and the service ratio on this debt 18.1
percent by 1975 (see Case I:I, attached Table).
191.      The table also shows, for purely illustrative purposes, the
implications of alternative growth and trade assumptions after 1975. If it
is assumed that the growth in GDP reaches and is maintained at 7.0 percent
annually while exports increase at 8 percent and imports at slightly less
than the GDP growth rate, the annual level of external capital required by
1985 would amount to US$880 million (as compared with US$813 million in 1975
on the mission's GDP growth and trade assumptions) while outstanding public
external debt would reach US$4.3 billion and the debt service ratio about
15 percent. If the CONADE draft plan assumptions are projected through
1985 the external capital requirements, the level of public debt and the
public debt service ratio would decline markedly. On the other hand, if
imports and GDP grow in line with the CONADE assumptions but the export
growth rate amounts to around 8 percent annually, the capital inflow
requirements, the size of the external debt and the level of the debt service
ratio would rise very sharply by 1985.



- 67 -
EXTERNAL CAPITAL REQUIREMENTS AND DEBT SERVICE
ON ALTERNATIVE ASSUMPTIONS, 1971-85
Case I              Case II             Case III
1971-75   1976-85   1971-75    1976-85   1971-75  1976-85
Assumption
GDP (% p.a.)                           5.5       7.0       7.2       M.0        7.2       8.u
Exports (% p.a.)                       6.o       8.0      10.4      10.2        6.o       8.0
Impo,ts (% p.a.)                       5 3       6.7       9.0      10.0       9.0       10.0
Item                          1971      1975      1985      1975      1985       1975      1985
Exports, goods and NFS
(US$ million)            2,245      2,837     5,784     3,359     8,872     2,837      5,784
Imports, goods and NFS
(US$ million)            2,284      2,807     5,313     3,227     8,363     3,227      8,363
Resource gap
(US$ million)               39        -30      -h71      -132-     -509       390      2,579
Gross capital inflow
(NJ3$ million)             7h2        813       879       627       460     1,299      7,741
Net capital inflow
(US$ million)              369        307        51       189        31       762      4,009
External public debt
(US$ million)            2,087      3,015     4,319     2,569     3,607     3,223     14,827
External public debt
ratio (%)                 18.6      17.0     li.8      13.0       6.8        18.1     47.8
Source: Mission estimates.






APPENDIX
THE BEEF PROBLEI, 1970/71 AND OUTLOOK
Summary
1.        Becauise of its role both as the major article of consumption and
the chief export (20 percent of total exports in 1970) the Government has
in the past year and a half--as often in previous years of relatively low
levels of production--been confronted with a dilemma:  policies to promote
exports and improve balance of payments viability have adversely af'fected
the supply available for domestic consumption, stimulating price increases
and aggravating the problem of economic management. Contrariwise, policies
aimed at, insuring the availability of low priced beef and retarding cost of
living increases have proved injurious to export earnings.
2.        The Argentine beef industry in 1970 and the first quarter of' 1971
was marked by a severe decline in beef exports, steep rises in beef prices
and sharp reductions in cattle deliveries to packinghouses, with the situa-
tion in all three aspects deteriorating progressively through mid-March of
this year. The decline in exports and in deliveries to the organized mar-
kets reached near-crisis proportions early this year. The sharp rise in
the price of beef was the single most important factor contributing to the
increase of 30 percent in the cost of living in the twelve months ending
February 1971 and to the breakdown of the highly successful stabilization
effort inaugurated in March 1967.
3.        The extent of the dramatic turn around in the beef situation can
be seen by the following: (i) the Liniers auction price of cattle more than
doubled between January 1970 and January 1971. (ii) The average retail
price of beef during the period January 1970 to January 1971 nearly doubled.
Per capita domes-tic consumption declined from 75 to 64 kg. (annual basis)
between January/February 1970 and January/February 1971.   (iii) In January/
February 1971' the volume of exports was half and the value two-thirds the
level of a year ago. (iv) Cattle sales by ranchers in 1970 were about 20
percent below the level of the preceding year. In the two months January/
February 1971 marketings were around 35 percent below the corresponding
period of the previous yf2ar and deliveries at Linier8 in the second half
of March 1971 shrunk to about one-fifth of the level of March 1970.
4.        The principal cause of the rise in beef prices in 1970/71 was a
sharp decline in supply, resulting in part from the fact that the Argentine
cattle cycle reached its low point during this period. The supply problem
was significantly intefnsified by the tax and pricing policies followed in
earlier years, which served to depress exports, divert supply to the domestic
market and keep prices low. An unfavorable environment for cattle invest-
-ment resulted, accelerating the cycle by encouraging growers to market cattle,
rather than expand their herds. Finally, unusually favorable grazing weather



APPENDIX
Page 2
in the late Argentine fall of 1.970 and summer of 1970-71 added to ranchers'
inducement to withhold cattle in order to take advantage of higher prices.
The supply shortage was aggravated by a substantial increase in real wages
which took place in 1969 znd a further increase which occurred in 197C).  The
two factors taken together, a sharp drop in supply and a significant increase
in the real income of workers, combined to produce a swift rise in prices,
which was intensified by high world prices for beef.
5.      As a result of the increase in cattle prices the profitability lo
packinghouses of supplying the export market declined significantl.y in the
secon(l half of 1970.  A number of export packinghouses either curtailed
or ent.irely closed down their operations.  By April 1971, export prices
had risen further, the profitability of meat processing for export. improved
and packinghouses activity revived.
6.      Although the Government sought in 1970 and 1971 to reverse the
above tendencies through a wide variety of measures -- including tax con-
cessions to ranchers and exporters, and credit on advantageous terms --
the crisis in supply and the high price levels have persisted through the
preser.t time.
7.      The dramatic increase in prices that has taken place recently has
had the desirable longer run effect of stimulating ranch investment and
expansion of herds.  Prcovided appropriate policies in the form of incentives
to ranchers and to exporters are pursued, and that the already initiated
modernization of the packinghouse industry moves ahead, Argentina, one of
the wcrld's few important sources of beef, should be well placed by 1972-73
to take advantage of the strong world market for beef that is expected to
continue.
Principal Causal Pactors in 1970-71 Situation
8.        An understanding of the current beef crisis requires answers to
three closely related questions:  Why has the supply of beef declined?   Whly
Lave e)xorts fallen sharply'?  Why have prices risen markedly and what has
been their efi'ect on the recent renewal of inflation?
9.        Supply.  The decline in beef slupply was primarily the consequence
of the depletion of' herds 'beginning in 1966 which culminated with very heavy
slaughter rates in 1968-69. In part this was a manifestation of the normal.
six-year Argentine cattle production cycle, but the cycle was amplified by
a reduction in profitability and the incentive to invest in ranching in the
period after 1965. The disincentive to invest was the result of a marked
deterioration in prices received relative to input costs of cattle producers,
coupled with a de..erioration in the relation of livestock to crop prices
during the same period. Although world demand and international beef prices
were strong during these years Government export tax and beef pricing policy
weakened the incentive of' -ranchers to build up their herds. This situation
began to be reversed in early 1970 when the cycle turned.upward, and the
increase in beef prices :induced ranchers to withhold breeding stock and
begin to rebuild their hercls; this action further reduced meat supply and



APPENDIX
Page 3
accelerated the upward movement of prices. The trend was accentuated by
unusually favorable grazing conditions in the Argentine autumn of 1970 and
later, in December 1970 and January 1971, which induced ranchers to hold
back their cattle, fattening to heavier weights in order to take advantage
of the higher prices.
10.       As a consequence of the high slaugh-ter levels of 1968-69 the
size of the cattle herd, a point of some controversy in Argentine, is
believed to have declined from an estimated 51.5 million head in June 1965,
the last official cattle census, to 49.4 million head in Jwiu 1970.  Vliie
the recen-t sharp upturn in price is undoubtedly encouraging lerd expansion
it will not quickly lead to a great increase in numbers. Some industry
sources helieve that the present herd expansion will resuJt in a significan t
increase in cattle deliveries that should reach its peak in 1973 or 1974.
While, therefore, the current situation of sharply reduced produictionL has
created a very difficu]t short run problem, the fact that herds are being
built up again is highly desirable for Argentine economLc prospects in
the medium term.
11.       As rioted above, the depletion of herds beginning around J966
took place because of -the lack of incentive to invest oni the -part of
ranchers. The high export -taxes introduced after the 1967 devaluation
increased domestic supply and depressed beef prices. nie cost of cattle
inputs in relation to the prices obtained by ranchers increased by about
one-third in 1966 and by 1969 were some 55 percent above the 1965 level.
During the same period of falling real livestock prices and ranchers'
terms of trade the price of meat declined by about 50 percent in relation
to the average crop prices.  The Balcarce project reapprfaisal mission of
July 1970 concluded that in 1967-69 the return on typical project invest-
ment amounted to only 11-13 percent as compared with anound 25 percent at
the time the project was appraised in 1966. By mid-197() higher beef prices
had resulted in an increase in the return to around 21) percent on the
average, and the return must have increased further since that date.
12.       A succession of Government policy measures in 1970-71 was
introduced in an effort to expand beef production and combat -the shortage
that was becoming increasingly evident. In April, the Government sought
-to counter rising beef prices by limiting consumption through a policy
of beef-less days in restaurants. The measure was ineffective and prices
continued to rise steadily.  Tax concessions and a measure to restrain
slaughter for domestic consumption also had little effect on increasing
the beef supply and exports. In late 1970, the Government virtually
eliminated export taxes on beef and, in an effort to tackle the long range
problem of inadequate supply, exempted raisers of breeding stock from
income taxes for a three-year period. Although the cattle industry welcomed
these measures as positive s-teps in promoting a long-term solution, the
beef supply crisia continued throughout the first quarter of :1971.  In a
further effort to deaJ with the problem the Government announced in February



APPE11DIX
Page 4
an(d introduced in March ani auction sales tax systerm and also retail price
ceilings (the latter as part of a generalized system of price controls or,
key consumer goods).  The object of the po1licy was to induce ranchers to
market immediately on groumds that there was no point in the-r withhoi1(Undin,
beef in the hope of receiving still higher prices. Opposition to Uhe meas-
ures was vigorous, catt:le sales to the established markets declined preci.pi-
tously, and the policy was abandoned at the begimning of April, although
retail ceiling prices werer mairrtained along with a newly-introducccl policy
of banning domestic consumption on alternate weeks for a three-month period
through the end of Jane. Although the ceiling price was set at a level
believed to be adequate to encourage the rebuilding of herds, ranchers
apparently did not find the unwieldly system an acceptable substitute for
the free auctioni market., and did not consider the price ceiling (1.43
pesos/kg) adequate remuneration, taking into account recent sharl. increases
in the general price level., as well as probable future price increases.
Their opposition to the system was probably heightened somewhat by the
failure of the relevant decrees to stipulate the measures to be taken ii
the event that the auction price fell below the floor price.
13.       Prices.  The decline in supply described above has been the
principal reason for the} extreme rise in the price of beef in the last
fifteen months.  The inf.uence of declining supply was accentuated by
the rise in real income--aggregate real income in 1970 having increased
by about 5 percent. Beef is the principal article of consumption in the
Argentine di.et and is comparatively price-inelastic so that declines in
supply are accompanied by more than proportionate increases in price as
the Argentirte consumer strives to maintain his beef consumption standard.
Thus, while the nominal retail price of beef rose 90 percent between
January 197(; and .January 1971, and -the real price by 70 percent, per
capita consumption declined by only about 15 percent.  The tendency for
prices to rise has been further accentuated by the existence of strong
world market prices.
14.       The economic management problem resulting from the beef shortage
in the last year has been greatly accentuated because of the effects of
rising beef prices on the behavior of' the cost of living index. The
increase in beef prices that began in the first half of 1.970 was probably
the major single influence in sparking the renewal of inlflation following
a three year period in which the rate of price increase was progressively
brought dowrn from an average of around 30 percent annually to less than
10 percent in 196'3. In -the twelve months from December 1969 to December
1970 the cost of livinag index increased by 22 percent (the rise on an
annual average basis was 13.5 percent). In the first two months of 11971
a further increase of 9 percent took place.
15.       The increase in the price of beef was rather quickly reflected
in increases in other food prices. The process of rising prices was
transmitted before long to other items, though at a less rapid rate than
in the case of beef and other foods, as expectations of renewed price
increases toolk hold and the inflationary psychology became widespread.



APPENDIX
Page 5
COST OF LIVINIG CHIANGES, 1968-1971
(Index Nov. 1969 = 100)
NIov.   Nov.    Aug.    Nov.    Jan.     Feb.
1968    1969    1970    1970   1971     19'71
Cost of Living           92     100     110     120     131      135
Beef                     94     100     130     172     192      29D3
All Other than Beef      92      100     106    111     120      123
Source:  IBRD staff based on National Statistics Office data.
This price-cost spiral was also given upwari twists following wage in-
creases which took place in March 1970 and again towards the end of -the
year. Since credit and fiscal policies were on the whole fairly conserva-
tive during 1970, there is no doubt that the principal source of the infla-
tion is to be found in the above mentioned cost-push factors with the
initial stimu2us deriving from the shortage of beef.  I, is worth n,otiag
that beef almost certainly carries an excessively high weight in the cost
of living index--movements of which are widely publicized and used by
labor and management in their wage and pricing calculations3 ,,he 15 percent
weight assigned to beef in the index is the result of a consumer market
basket survey conducted in 1960. Since then consumption expenditure on
items other than beef almost certainly increased significantl;y as produc-
tion of consumer goods by Argentina's broadly based manufacturing industry
has been extensively developed.
16.       E)xorts. While both the volume and value of exports have in-
creased substantially in recent years the increase in value has beEn greater
than that of volume.  Thus, since 1964, the total increase in export value
has been 30 percent while the increase in export volume amouiited to 20
percernt-.  The more rapid increases in value are in part due to rising world
prices but also to the fact that in the last seveiral years a major change
in the composition of Argentine beef exports has taken place a change that
could make possible increased export receipts in the period ahead. A far
higher proportion of beef exports -today as compared with the early and
mid-19601s takes the form of processed products.  The share of to-tal exports
accounted for by cuts, cooked and frozen beef has risen sharply while the
proportion of earnings received from beef sales in the fCorm of' the traditional
chilled quarters has declined.  This shifting composition reflects partly
the response of Argentine mea-t packers to market opportunities; -thuts, the
BOB export price of cooked/frozen beef is close to three Limies that of the
same weight of chilled and frozen quarters. As a resul-t of the shift in
produc-t composition as well as rising prices generally the ;-verage value



APPENDIX
Page 6
per ton of Argentine beef exports rose from about US$540 per ton to Us$'620
per ton be(ween 1968 and 1970.  The shift in product mix also reflects the
necessity to adapt to the restrictions onI Argentine chiilecd beel exports
introduced by Great Britain several years ago because of unacceptable
sanitary conditions and the presence of hoof anid mouth disease. Makinf5 a
virtue of necessity the Argentine packing industry responded with an
aggressive search for new markets and products. The consequence has been
the sharp increase in unit value of beef exports and an impressive diver-
sification in i-ts beef export markets. The U.K. market, which took 70
percert of Argentine exports of chilled and frozen beef in 1960 was
importing only about 30 percent of Argentina's exports by the end of the
decade.
17.       Since June/July 1970, however, exports have been declining.
The decline appears mainly to have been due to the sharp decline in
profitability of packers serving the export market as their costs--
predominant:Ly the price of cattle, -,'heir principal raw material, but also
other costs as well--rose more rapidly than the increase in world prices.
As cattle prices rose,several of the largest packers producing for the
export market eitJler shut down or sharply curtailed operations; the largest
packer, Swift, was already encountering financial difficulties which con-
tributed to the suspension of its operations.
18.       From March 1967 *to October 1970, beef exports were subject to
tax. This tax, designed in part to raise revenues but also to shift
supply to the domeistic market and hold down the cost of living in the
domestic market, reduced the relative advantage to packers of supplying
the export rm.arket: and thus served to retard the growth of exports while
resulting in low consumer prices and a consequent sharp increase in
domestic consumption. Per capita consumption of beef increased from 60-70
kg. per capita in 1964-65 *to over 80.kg. per capita thereafter. The tax
was gradually reduced in 1968 and 1969, and graduated to encourage exports
of more highly processed. products. In June 1970, the peso was devalued
14 percent, but the effect of this action on beef exporters' earnings was
largely negated by a simultaneous increase in beef export taxes. In
October, the Government sought to increase exports by virtually eliminating
export taxes for a 30-day period, a measure that was subsequently extended
for one year. An export premium on the more highly processed products was
also introduced. These measures, however, proved an inadequate offset to
the high prices export packers were forced to pay and the slump in export
trade continued.
The Outlook for Beef -Production and Exports
19.       The elimination of the complex auction tax system introduced in
March, the temporary ban on domestic consumption and the export subsidies,
taken together with ranchers' financial need to market cattle and a con-
tinuing rise in export prices, promised to result in some increase in
supply and exports. The returns, especially from high valued cooked/frozen
products, could continue! to rise if marketing return to normal levels,



APPENDIX
Page 7
given the present 10 percent tax credit for cooked, frozen and canned meat
products and the fact that additional plants have been installing facilities
for processing; moreover, recent cattle price rises have until recently had
little impact on the profitability of exporting cooked/frozen products since
U.S. price levels continued to increase. The Government's adoption of a
flexible exchange rate should have a positive effect on export incentives if
the rate is adjusted in a realistic manner.
20.       The outlook for beef exports for 1971 as a whole is, however,
very difficult to assess. A considerable increase in marketing will have
to take place if cattle prices are to be maintained at a level that export
packers would want to pay, estimated to be around the 1.40-1650 pesos per
kilo price range. Maintenance of an appropriate exchange rate in the
months ahead would, of course, improve the export outlook. In any event,
the very low level of exports in the first quarter of the year will
probably depress the level of exports for the entire year as compared
with 1970.
21.       Looking further ahead the growth prospects for the country's
beef export trade are more promising. It is estimated conservatively
that export earnings from beef--which accounted for about one-fifth of
total exports las-t year--could increase from the 1970 level of US$340
million to US$5ho-50 million by 1976. On the demand side, world markets
should continue strong and Argentina is one of the very few substantial
sources of beef exports.  Recent world price rises have been considerable,
the average price of beef imported into the United States having increased
by about one-fifth between 1966 and 1970, accelerating in the past year.
22,       On the Argentine supply side the current herd rebuilding cycle
should, in another year or so, begin to result in increesed production
aind the country could be wel] placed to take advantage cf a wiique market
opportunity.  To encourage a continued growth of beef exports in the face
of the expected growth in domestic consumption will require Lhz-dt the
Government adopt specific measures to that end, and maintain them in a
stable framework -- in distinction to past practices which have been
marked by a high degree of instability in Government policy towards the
livestock sector.






STATISTICAL APPENDIX
Table
1. POPULATION
1.1         Vital Statistics, 1960-70
1.2         Age Specific Fertility Rates, 1965
1.3         Age Specific Death Rates, 1963
1.4         Age and Sex Distribution of Population, 1965-85
1.5         Output per Head of Labor Force, 1960-70
1.6         Unemployment Rates, 1963-70
1.7         Structure of Employment, 1950-80 (in thousands)
1.8         Structure of Employment, 1950-70 (percentage distribution)
1.9         Annual Rates of Growth of Employment, 1950-70
2. NATIONAL ACCOUNTS
2.1         Gross Domestic Product by Sector of Origin, 1960-69
(in current prices)
2.2         Gross Domestic Product by Sector of Origin, 1960-69
(in constant prices)
2.3         Annual Growth Rates and Composition of GDP by Sector of
Origin, 1960-69
2.4         GDP Deflator, 1960-70
2.5         Growth of Real National Output and Population, 1960-70
2.6         Expenditure on Gross National Product in Current Prices,
1960-70
2.7         Expenditure on Gross National Product in Constant (1969)
Prices, 1960-70
2.8         Macro-Economic Growth Indicators
2.9         National Income Aggregates, 1960-70
2.10        National Income Aggregates, 1969-70 and Projections,
1971-76
2.11        Gross Fixed Domestic Investment by Type of Good, 1960-69
2.12        Financing of Investment, 1960-70
3. BALANCE OF PAYMENTS
3.1         Balance of Payments, 1960-70
3.2         Balance of Payments in 1970 and Projections for 1971-80
3.3         Commodity Exports. 1960-70
3.4         Principal Industrial Products Exports, 1960-69
3.5         Structure of Merchandise Exports, 1960-70
3.6         Major Commodity Exports, 1960-71; Projections, 1971-76
3. 7        Percentage Distribution - Volume of Beef Exports
3.8         Percentage Distribution - Value of Beef Exports
3.9         Growth in Exports, 1960-68 and Projections to 1976
3.10        Growth in Exports, Major Commodities, 1960-69 and
Projections to 1976



Table
3.11          Tax Rates for Principal Exports at Selected Dates
3.12          Imports by Major Categories, 1960-70
3.13          Structure of Merchandise Imports, 1960-70 and
Projected 1971-76
3.14          Structure of Imports in Relation to Consumption,
Manufacturing Value Added, Gross Fixed
Investment and GNP, 1960-70
3.15          External Commerce by Areas and by Countries, 1960-69
4. EXTERNAL DEBT
4.1           Argentina - External Public Debt Outstanding as of
December 31, 1969
4.2           Estimated Future Service Payments on External Public
Debt Outstanding,Including Undisbursed as of
December 31, 1969
4.3           External Debt Service 1964-70 and Projections, 1971-80
5. PUBLIC SECTOR FINANCES
5.1           Public Sector Resources for Investment - 1966-71 (in millions of pesos)
5.2           Public Sector Resources for Investment - 1966-71 (% distribution)
5.3           Public Sector Resources for Investment - 1966-71 (annual changes)
5.4           Public Sector Rescurces for Investment - 1966-71 (% of GNP)
5.5           Analysis of Public: Sector Finances, 1966-71 (in millions of pesos)
5.6           Analysis of Public Sector Finances, 1966-71 (% of GNP)
5.7           Central Administration Operations, 1966-71
5.8           Operations of the Special Accounts, 1966-71
5.9           Operations of the Decentralized Agencies, 1966-71
5.10          Operations of the National Energy Fund, 1966-71
5.11          Operations of the Social Security System
5.12          Operations of the State Enterprises, 1967-71,
Classified According to Function
5.13          Operations of the State Enterprises, 1967-71
5.14          Operations of the Provincial Governments and
the Municipality of Buenos Aires
5.15          Public Sector Transfers
5.16          National Government Revenues, 1961-71 (in millions of pesos)
5.17          National Government Revenues, 1961-69 (in millions of 1969 pesos)
5.18          Import Duty Performance, 1966-69
5.19          Treasury Operations, 1966-71
5.20          Treasury Revenues, 1.966-71
5.21          Treasury Cash Expenditures, 1967-70
5.22          Analysis of Tax Burden 1960-69
5.23          Collection and Allocation of Tax Receipts
5.24          Sources and Allocations of Taxes Earmarked to the
National Energy F-nd and the National and
Provincial Road Funds, 1966-70
5.25          Other Earmarked Taxes



Table
5.26          Taxes on Foreign Trade, 1962-71
5.27          Civil Employees of the National Government, 1966-69
5.28          Public Sector Finances, 1968-76
5.29          Annual Percent Change in Public Sector Finances, 1969-76
5.30          Projected Revenues and Expenditures of the State
Enterprises
5.31          Annual Percent Change in Projected Revenues and
Expenditures of the State Enterprises, 1969-75
5.32          Public Sector Revenues and Savings as Percentage of
Gross Domestic Product, 1969-76
5.33          Foreign Exchange Component of Proposed Public Sector
Investment Program for 1971-75
6. MONETARY STATISTICS
6.1           Consolidated Summary of the Central Bank and Commercial
Bankst Accounts, 1965-October 1970
6.2           The Central Bank:  Summary Accounts, 1965-October 1970
6.3           The Commercial Banks:  Summary Accounts, 1965-October 1970
6.4           The Mortgage Institutions:  Summary Accounts
1965-October 1970
6.5           Monetary Summary, 1965-69
6.6           Changes in the Monetary Situation, 1965-69
6.7           Composition of Money Supply, 1961-October 1970
6.8           Money and Quasi-Money in Relation to GDP: 1961-69
6.9           Official Foreign Exchange Reserves, 1961 - March, 1971
6.10          Monetary System, 1968-71
7. AGRICULTURAL STATISTICS
7.1           Agricultural Production, 1960/61 - 1969/70
7e2           Gross Output of Agriculture by Sub-Sector, 1960-69
7.3           Contribution of Agricultural Value-Added to Gross
Domestic Product, 1960-70
7.4           Percentage Distribution of Public Expenditures for
Agricultural Development, 1956-65
7.5           The Tenms of Trade for Farmers, 1959-69
7.6           Wheat Production, Supply and Utilization, by Crop
Years, 1959-70
7.7           Grain Sorghum Production, Supply and Utilization, by
Crop Marketing Years, 1959-70
7.8           Corn (Maize) Production, Supply and Utilization, by
Crop Marketing Years, 1959-70



- iv -
8. OTHER SECTORS
Table
8.1           Industrial Production Volume Index, 1961-70
8.2           Mineral Production, 1961-69
8.3           Volume of Man-ufacturing Production, 1961-69
9. PRICES AND WAGES
9.1           Principal Price Indicators
9.2           Wages, Manufacturing Industry and Conmerce, 1960-70
9.3           Wages, Selected Occupations, 1968-70
9.4           Evolution of Agricultural and Non-agricultural
Prices, 1939-69



Table 1.1: VITAL STATISTICS, 1960-70
Rate of
Crude Birth Crude Death  Natural     Net           Total           Rate of
Year     Rate         Rate     Increase Migration     Pamilation         Growth
(Per thousand Population)  (Percent per Year)  (in thousands)  (Percent per Year
1960      22.7        8.6         1.4      0.3          20,014             1.7
1961      22.5        8.3         1.4      0.2          20,356             1.6
1962      22.8        8.5         1.4      0.2          20,690             1.6
1963      22.5        8.6         1.4      0.1          21,030             1.5
1964     22.4         8.7         1.4      0.1          21,355             1.5
1965      21.4        8.7         1.3      0.1          21,675             1.4
1966     20.9         o.4         1.3      0.1          22,000             1.4
1967      20.9        8.4         1.3      0.1          22,330             1.4
1968      20.9        8.4         1.3      0.1          22,665             1.4
1969     20.9         8.4         1.3      0.2          23,015             1.5
1970     20.9         8.4         1.3      0.2          23,364             1.5
Rate of Growth 1960-70: 1.56
Source: Censo Nacional de Poblaci6n 1970, Instituto Nacional de Estadistica y Censos.



Table 1.2:   AGE SPECIFIC FERTILITY RATES, 1965
(per thousand)
AGE GROUP                               1965
Under   20                                     26.7
20 - 24                                    149.6
25 - 29                                     146.6
30 - 34                                    .111.5
35 - 39                                     69.5
40- 44                                       24.3
45   Plus                                     5.4
Source:   U.N. Demographic, Yearbook, 1965



Table 1.3: AGE SPECIFIC DEATH RATES, 1963
(per thousand)
Total          Male           Female
All Ages                                8.6            10.1           7.1
Less than 1 to 4                       16.2            17.4          15.1
5-9                                0.7             0.8           0.6
10-14                               0.7             0.8           0.5
15-19                               1.2             1.3           1.0
20-24                               1.6             2.0           1.3
25-29                               1.8             2.1           1.4
30-34                               2.3             2.6           1.9
35-39                               2.9             3.4           2.3
40-44                               4.1             5.2           3.0
45-49                               6.2             8.1           4.2
50-54                               9.6            12.9           6.3
55-59                              14.4            19.3           9.3
60-64                              22.6            29.5          15.4
65-69                              31.1            39.6          22.3
70-74                              48.7            58.1          39.0
75-79                              73.5            85.4          62.6
80 Plus                           153.8           181.1         136.5
Source: U. N. Demographic Yearbook



Table 1.4: AGE AND SEC DISTRIBUTION OF POPULATION, 1965-85
(in thousands of persons)
MALES                                  FEMALES
Age
1965    1970    1975    15980   1985     1965     1970    1975    1980    1985
0-4         1,146   1,210   1,331   :1,391  1,436     1,111   1,197   1,286   1,344   1,378
5-9         1,1o6   1,128   1,269    1,329  1,388     1,Co6   1,119   1,228   1,285   1,341
10-14        1,060   1,095   1,189   1,271    1,330    1,022   1,059   1,152   1,230   1,286
15-19          969   1,051   1,154   1,191   1,272       937   1,036   1,092   1,155   1,232
20-24          858     960   1,106    1,155   1,191      839     949   1,067   1,093   1,156
25-29          802     852   1,011    1,108   1,155      774     850     977   1,067   1,094
30-34          787     794      897   1,011   1,107      763     782     875     977   1,066
35-39          779     777     833      894   1,007      768     769     8C4     873     974
0-44            719     762     807     823     884      710     771     785      797     867
45-49          595      692     781     786     803      6014    709     782      775     788
50-54          549     559      692     7144    751      557     595     712      765     758
55-59          489     503      545     6L4     692      485     543     590     687      739
60-64          402     432     473     1488     576      391     464     529     558     652
65-69          285     336     384     4o1      415      296     361     436     484     512
70 Plus        384     451     565      645     707      434     558     710     859   1,002
All Ages    10s,930  11,602  13,037  13,881  14,714   10,745  11,762  13,025  13,949  14,845
Total Both
Sexes      21,675 23,364  26,062  27,830  29,559
Source:  Centro Latinoamericano de Demografla.   Boletfn Dauogrdfico (Santiago de Chile),
Oct. 1968. Censo Nacional de Poblaci6n, Instituto Nacional de Estadlstica y
Censos, 1970.



Table 1.5:  OUTPUT PER HEAD OF LABOR FORCE, 1960-70
(in 1960 pesos)
Average           Average
Sector                      1960    Growth    1965    Growth     1970
Rate              Rate
TOTAL                                2,006     2.1      2,227     1.0     2,345
A.  Agriculture                          1,828      4.0     2,221     3.1     2,590
B.  Non-Agriculture                       2,114     2.4     2,376     0.8     2,470
1. Basic Goods and Services           2,449    4.2      3,015     1.2     3,204
a. Mining                         4,323     4.2     5,322      3.6     6,355
b. Manufacturing                  2,714     4.9      3,445     1.5     3,703
(i) Industrial                 3,966                               5,600
(ii) Handicraft                   624                                 673
c. Construction                   1,500     -2.2    1,341      1.5     1,441J
d. Basic Services                 2,207     4.3     2,726      1.9     3,051
2. Services                          1,782     0.2     1,796      0.0     1,792
a. Commerce                       2,555     1.3     2,720      0.3     2,704
b. Other Services                 1,286     -1.2     1,210    -0.2     1,197
(i) Government                 1,549    -0.5     1,508    -0.1     1,496
(ii) Others                     1,105    -1.6     1,017    -0.3     1,002
Source: ILO.



Table 1.6:  UNEMPLOYMENT RATES, 1963-70
(with respect to economically active population)
(in percentages)
General   Buenos 2/Sa                          inl/
Level     Aires /    Cordoba   Rosario   de Tucel -        ndaza 1/
1963
July 2/       8.8       8.8
1964
April 3/      7.5       7.5          -         -
July 37       7.4       7.4          -         -                          _
October       6.3       5.7         9.5       7.6         9.2            9.2
1965
April         6.0       5.5         8.6       8.9         5.5            6.o
July 3/       6.1       6.1          -         -           -              -
October       4.6       4.4         6.3       5.5         6.4            4.7
1966
April         6.5       6.4         7.3       7.2         9.4            3.8
July 3/       5.3       5.3          -         -           -              -
October       5.2       5.0         6.5       5.9         7.4            2.7
1967
April         6.4       6.1         8.9       6.8        10.0            2.4
July 3/       6.8       6.8          -         -           -              _
October       6.2       6.2         7.3       6.1         9.8            2.6
1968
April         5.6       5.4         7.3       4.7        11.0            2.5
July 3        4.8       4.7          -         -           -              _
October       5.0       4.7         4.3       5.9        12.7            2.4
1969
April         4.5       4.0         6.o       5.5        12.8            2.5
July 2/       4.9       4.8          -         -           -
October       4.3       4.1         3.2       5.6        11.6            2.8
1970Y
April          .4.9                 4.3       5.5        10.8            3.B
July                    4.6          -         -
J Seasonal Activity in the jurisdiction included.
2/ Includes federal capital and parts of greater Buenos Aires.
Enquiry realized only in federal capital and parts of greater Buenos Aires.
j/ Provisional.
Source: CONADE - Secretaria de Estado de Trabajo, en el Boletin de Estadisticas
Sociales, No. 8, February 1969.
IL.



Table 1.7:   STRUCTURE OF EMPLOYMENT, 1950-80
(in thousands)
Sector                               1950    1960    1965     1970    1975    1980
TOTAL                                6,850   7,850   8,400   9,050    9,890   10,650
A.  Agriculture                          1,674   1,500   1,420   1,380   1,340    1,300
B.  Non-Agriculture                     5,010   6,000   6,400   6,990    8,000    9,000
1.  Basic Goods and Services        2,548   2,980    3,050   3,355
a.  Mining                        31      40      50       65
b.  Manufacturing              1,575   1,870   1,910   2,000
(i) Industrial               955   1,170   1,190   1,230
(ii) Handicraft               620     700     720     770
c.  Construction                 420     440     450      600
d.  Basic Services               522     630     640      690
2.  Services                        2,462   3,020    3,350   3,635
a.  Commerce                      942   1,180   1,300    1,400
b.  Other Services              1,520   1,840    2,050   2,235
(i) Government                680     750     800     835
(ii) Others                    840   1,090   1,250   1,400
C. Unclassified                           166     350      580     680     550      350
Source: Los Censos Nacionales and I.L.0 estimates.



Table l.d:   STRUJCTRE OF EMPLOYMENT, 1950-70
(percentage distribution)
Sector                                 1950    1960    1965    1970
TOTAI                                  100.0   100.0   100.0   100.0
A. Agriculture                              2.hJ    19.1    16.9    15.3
B. Non-Agriculture                          73.1    76.4    76.?    77.2
1. Basic Goods and Services             37.2    38.0    36.3    37.1
a. Mining                             0.5     0.5     0.6     0.7
b. Manufacturing                     23.0    23.8    22.7    22.1
(i) Industrial                   13.9     14.9    1h.2    13.6
(ii) Handicraft                    9.1      8.9     8.6     8.5
c. Construction                       6.1     5.6     5.4     6.6
d. Basic services                     7.6     8.0     7.6     7.6
2. Services                             35.9    38.5    39.9    40.2
a. Commerce                          13.8    15.0    15.5    15.5
b. Other bervices                    22.2    23.4    24.4    24.7
(i) Government                    9.9      9.6     9.5     9.2
(ii) Others                       12.3    13.9     JI.9    15.5
C. Unclassified                              2.4     1.5     6.9     7.5
Source: Table 1.10.
ILO



Table 1.9t   ANNUAL RATES OF OROWTH OF EMPLODWT, 1950-70
Sector                            1950-1960        1960-1965       1965-1970
TOTAL                             1.4              1.4             1.5
A.  Agriculture                      -1.1             -1.1           -0.6
B.  Non-Agriculture                  1.8              1.3             1.8
1.  Basic Goods and Services     1.6              0.5             1.9
a.  Mining                   2.6              4.6             5.4
b.  Manufacturing            1.7               0.4            0.9
(i) Industrial           2.1              0.3            0.7
(ii) Handicraft           1.2              0.6            1.3
c.  Construction             0.5              0.5            5.9
d.  Basic Services           1.9              0.3            1.5
2.  Services                     2.1              2.1             1.6
a.  Commerce                 2.3              2.0            1.5
b.  Other Services           1.9              2.2             1.7
(i) Government           1.0              1.3            0.9
(ii) Others               2.6              2.8            2.3
C.  Unclassified                     7.7              10.6            3.2
Source: ILO.






Table 2.1: GROSS DOMESTIC PRODUCT BY SECTOR OF ORIGIN, 1960-1969
(in millions of pesos)
1960     1961    1962     1963      1964      1965      1966      1967     1968      1969
Goods Sector                               4,847     50      6,950    8,709    12,466    17,144    20,169    25,021    28,692   32,861
Agriculture                              1,537    1,475    2,007    2,843     4,405     5,305     5,764     7,223     7,821    8,986
Mining                                      97      135      215      262        264      380       639       849       978     1,095
Manufacturing                            2,844    3,424    4,166    4,952      6,959   10,257    12,097    14,537    16,838    18,976
Construction                               370      475      562      652       837     1,202     1,669     2,411     3,055     3,803
Services Sector                            3,27k    4,823    6,982    7,330     9,607    13,234    16_,91    21,543    25,626   28,926
Electricity, gas, water                     112     159      223      311        376      611       893     1,322     1,615     1,768
Transport                                  579      679      827    1,138      1,555    2,041     2,863     3,709     4,614     5,186
Communications                              88      120      163      217        242      352       485       638       708       759
Commerce                                 1,504    1,741    2,022    2,332      3,008    4,215     4,924     5,973     7,213     8,547
Banking                                     366     449      601      699        894    1,152     1,398     1,816     2,455     2,772
Government                                 652      916    1,260    1,437      1,994    2,932     4,059     5,052     5,456     5,914
Other services                             675      758      987    1,196      1,539    1,931     2,295     3,032     3,566     3,980
GDP at Factor Cost                         8,822   10,332   13,032   16,039     22,073   30,378    37,086    46,563    54,318    61,787
Indirect Taxes less Subsidies                790    1,132    1,101    1,378     1,672     2,553     3,601     5,997     7,292     8,300
GDP at Market Price                        9,612   11,464   14,133   17,417     23,745    32,931   40,687    52,560    61,610    70,087
Source: Central Bank, Mission estimates.



Table 2.2: GROSS DOMESTIC PRODUCT BY SBCTOR OF ORIGIN, 1960-1969
(in millions of 1969 pesos)
1960      1961      1962     1963      1964      1965      1966     1967      1968      1969
Goods Sector                           25,788    26,233    26,426    25,920   29,401    31,631    30 467    29,894    30,621   32,861
Agriculture                           8,176     7,024     7,631     8.461   10,389     93788     8,707     8,630     8,3147   8,986
Mining                                  516       643       817       780      623       701       965     1,014     1,0W1    1,095
ManmfEu-s-lau-ti.'ig                 15,128    16,305    15,840    14,738   16,413    18,924    18,273    17,368    17,970   18,976
Construction                          1,968     2,262     2,137     1,940    1,974     2,218     2,521     2,880    3,260     3,803
Services Sector                        21 138    22,967    23,125    21,815   22,658    24,417    25,554    25,738    27,349   28 926
Electricity, Gas and Water             -596       757       848       926    -   7    T,127      1,349     1,779    1,7214    1,76b
Transport                             3,080     3,233     3,144     3,387    3,667     3,766     4,325     4,431     4,924    5,186
Communications                          468       571       620       646      571       649       733       762      756       759
Commerce                              8,000     8,290     7,688     6,940    7,094     7,777     7,438     7,136     7,698    8,547
Banking                               1,947     2,138     2,285     2,080    2,108     2,125     2,112     2,170     2,620    2,772
Government                            3,468     4,362     4,791     4,277     4,703    5,410     6,131     6,036     5,823    5,914
Other Services                        3,590     3,610     3,753     3,560    3,630     3,563     3,467     3,622     3,806    3,980
GDP at Factor Cost                     46,926    49,200    49,551    47,735   52,059    56,048    56,021    55,631    57,970   61,787
Indirect Taxes less Subsidies           4,202     5,390     4,186     4,101    3,943     4,710     5,4440    7,165     7,782    8,300
GDP at Market Price                    51,128    54,590    53,738    51,836    56,002   60,758    61,461    62,796    65,752    70,087
Source: Central Bank, Mission Estimates.



Table 2.3: ANNUAL GROWTH RATES AND COMPOSITION OF GDP BY SECTOR OF ORIGIN, 1960-69
(in 1969 pesos)
Annual Growth Rates                          Composition
1961  1962   1963  1964   1965  1966  1967   1968  1969       1960      1969
GDP at factor cost              1.8    0.7  -3.7    9.0   7.7   0.0   -0.7   4.2    6.6       100.0    100.0
Goods Sector                    1.7    0.7  -1.9  13.4    7.6  -3.7   -1.9   2 4    7.3        55.0     53.2
Agriculture                 -14.1   8.6  10.9   22.8  -5.8  -11.o  -0.9  -3.3    7.6        17.4     14.5
Mining                       24.6  27.1  -4.5 -20.1   12.5   37.7   5.1   3.0    4.9         1.1      1.8
Manufacturing                 7.8  -2.9  -7.0   11.4  15.3   -3.4  -5.0   3.5    5.6        32.2     30.7
Construction                14.9   -5.5  -9.2    1.8  12.4   13.7  14.2  13.2   16.6         4.2      6.2
Services Sector                 8.6    0.7  -5.7   3.9    7.8   4.6    0.7   6.2    5.8        45.o     46.8
Electricity, gas, water      27.0  12.0   9.2   -4.2  27.0   19.7  17.0   9.2    2.6         1.3      2.9
Transport                     5.0  -2.8   7.7    8.3   2.7   14.8   2.4  11.1    5.3         6.6      8.4
Communications               22.0   8.6   4.2 -11.6   13.7   12.9   4.0  -0.8    0.4         1.0      1.2
Commerce                      3.6  -7.3  -9.3    2.2   9.6  -4.4   -4.1   7.9   11.0        17.0     13.8
Banking                       9.8   6.9  -9.0    1.3   o.8   -o.6   2.7  20.7    5.8         4.1      4.5
Government                   25.8   9.8 -10.7   10.0  15.0   13.3  -1.6  -3.5    1.6         7.4      9.6
Other Services                o.6   4.0  -5.2    2.0  -1.8   -2.7   4.5   5.1    4.6         7.6      6.4
Source: Table 2.2



Table 2.14: GDP DEFLATOR, 1960-1970
Annual
Rate of
Year                      Deflator              Change (%)
1960                       0.188
1961                       0.210                  11.7
1962                       0.263                  25.2
1963                       0.336                  27.8
1964                       0.424                  26.2
1965                       0.542                   27.8
1966                       0.662                   22.1
1967                       0.837                   26.4
1968                       0.937                   11.9
1969                       1.000                    6.7
1970                       1.135                   13.5
Source: Tables 2.1 anl: 2.2



Table 2.5: GROWTH OF REAL NATIONAL OUTPUT AND PCPULATION, 1960-70
Real GIP            Annual                                    Annual
(in million    Index  Percent Population    Real GDP    Index  Percent
Year  1969 Pesos) 1969=100 Changes   (thousands) per Capita 1969=100  Changes
1960    51,128        72.6      -      20,0o14     2,555       83.9      -
1961    54.,59o       77.5    6.7      20,356      2,682       88.1    5.0
1962    53,738        76.3   -1.6      20,690       2,597      85.3   -3.2
1963    51,836        73.6   -3.5      21,030      2,465       81.0   -5.0
1964    56,002        79.5    8.0      21,355      2,622       86.1    6.3
1965    60,758        86.3    8.6      21,675      2,803       92.0    6.8
1966    61,461        87.3    1.2      22,000       2,794      91.8   -0.2
1967    62,796        89.2    2.2      22,330      2,812       92.3    0.5
1968    65,756       93.4     4.7      22,665      2,901       95.3    3.2
1969     70,087      100.0    6.6      23,015      3,045      100.0    4.9
1970    73,455       104.8    4.8      23,364      3,144      103.3    3.3
Source: Censo Nacional de Poblaci6n, 1970; Instituto Nacional de Estadistica y
Censos; Mission Estimates.



Table 2.6: EXPENDITURE ON GROSS NATIONAL PRODUCT IN CURRENT PRICES, 1960-1970
(in millions of pesos)
Net                     Consumption                        Total    Exports of   Imports of
Factor                                         Change in    Invest-    Goods and   Goods and
Year       GNP    Payments    GDP     Public   Private  Total   Inventories     ment      N.F.S.       N.F.S.
1960       9,565     47       9,612      863     6,682    7,545       97         2,183     1,025        1,141
1961      11,380      84     11,464    1,168     8,033    9,201      -52         2,651       936        1,324
1962      14,051     82      14,133    1,559     9,594  11,153         -         3,202     1,549        1,771
1963      17j322      95     17,417    1,748    12,195   13,943     -134         3,058     2,066        1,650
1964      23,601    144      23,745    2,411    16,566   18,977      585         4,575     2,162        1,969
1965      32,781     150     32,931    3,469    22,496   25,965      818         6,504      2,778       2,316
1966      40,374     313     40,687    4,806    27,646   32,452       92         7,426      3,552       2,743
1967      51,890     670     52,560    6,o47    35,486  41,533        -7        10,066     5,357        4,396
1968      60,893     717     61,610    6,579    42,086   48,665       31        12,487     5,476        5,019
1969      69,313     774     70,087    7,080    47,536   54,616      227        15,681      6,996       7,206
1/
1970-/    82,567     804     83,371     n.a.     n.a.    64,395        -        19,048     8,220        8,286
1/ Estimate.
Source:  Central Bank and Mission estimates.



Table 2.7: EXPENDITURE ON GROSS NATIONAL PFOaJCT IN CONSTANT (1969) PRICES, 1960-1970
(in millions of pesos)
Net                C O N S U M P T I O N                 Private     Public
Factor                                      Change in    Fixed       Fixed;/       Total     Excports of  Imports of
Year     G N P   Payments G D P    Public  Private  Total    Inventories  Investment  Investment  Investment  Goods & NFS   Goods & NFS
1960     50,878    250    51,128    4,590  35,543   40,133       516         n.a.        n.a.       11,612       5,452        6,069
1961    54,190     400    54,590    5,562  38,252   43,814      - 248        n.a.        n.a.       12,624       4,457        6,305
1962    53,426     312    53,738    5,928  36,479   42,407        -          n.a.       n.a.        12,175       5,890        6,734
1963    51,553     283    51,836    5,202  36,295   41,497      - 399        n.a.        n.a.        9,101       6,149        4,911
1964    55,662     340    56,002    5,686  39,071   44,757     1,380         n.a.       n.a.        10,790       5,099        4,644
1965    60,481     277    60,758    6,400  41,506   47,906      1,509        n.a.        n.a.       12,000       5,125        4,273
1966     60,988    473    61,461    7,260  41,761   49,021       139        7,423       3,656       11,218       5,366        4,144
1967    61,996     800    62,796    7,225  42,397   49,622       - 8        7,529       4,505       12,026       6,400        5,252
1968    64,987     765    65,752    7,021  44,916   51,937        33        8,437       4,857       13,327       5,644        5,356
1969     69,313    774    70,087    7,080  47,536   54,616       227        9,636       5,818       15,681       6,996        7,206
1970c/  72,705     750    73,455     na      na     56,733         -       10,714       6,066       16,780       7,242        7,300
]/ Estimate.
g/ Including State Economic Enterprises.
Source: Central Bank, Mission estimates.



Table 2.8: MACRO ECONOMIC GROWTH INDICATORS
Real Rate        Gross          Rate of       Domestic
of Growth      Investment        Price        Savings
Year            GDP (%)         Ratel/        ChangeZ/         RateQ/
1960                             .227             -            .215
1961              6.8            .231           11.7           .197
1962             -1.6            .226            25.2          .211
1963             -3.5            .176            27.8          .199
1964              8.0            .193            26.2           .201
1965              8.5            .198            27.8           .212
1966              1.2            .182            22.1           .202
1967              2.2            .192            26.4           .210
1968              4.7            .203            11.9          .210
1969              6.6            .224             6.7           .221
1970              4.8            .228            13.5           .228
1/ Gross Investment including inventories as fraction of GDP.
2/ Percentage change in GDP deflator over previous year.
3/ Domestic savings as fraction of GDP.
Source: Mission Estimates.



Table 2.9: NATIONAL INCOME AGGREGATES, 1960-1970
(in.millions of 1969 pesos)
1960       1961       1962       1963       1964       1965       1966       1967       1968       1969       1970
Gross Domestic Product                   51,128     54,590     53,738     51,836     56,002     60,758     61,461    62,796     65,752      70,087     73,455
Rate of Growth (%)                        -            6.8       -1.6       -3.5        8.0        8.5        1.2       2.2        4.7         6.6       4.8
Gross Domestic Investment                11,612     12,624     12,175      9,101     10,790     12,000     11,218    12,026      13,327    15,681      16,780
Inventory Change                            516       -248        -         -399      1,380      1,509        139        -8         33         227        -
Gross Fixed Investment                   11,096     12,872     12,175      9,500      9,410     10,491     11,079    12,034      13,294    15,454      16,780
Public Investmentl/                      n.a.       n.a.       n.a.       n.a.       n.a.       n.a.      3,656     4,505      4,857      5,818      6,066
Private Investment                       n.a.       n.a.       n.a.       n.a.       n.a.       n.a.      7,423     7,529      8,437      9,636      10,714
Gross Domestic Savings                   10,995     10,776     11,331     10,339     11,245     12,852     12,440    13,174     13,815      15,471     16,722
Public Savingsl/                         n.a.       n.a.       n.a.       n.a.       n.a.       n.a.      1,166     3,994      4,807      4,227      5,213
Private Savings                          n.a.       n.a.       n.a.       n.a.       n.a.       n.a.     11,274     9,180      9,008     11,244      11,509
Consumption                              40,133     43,814     42,407     41,497     44,757     47,906     49,021    49,622     51,937     54,616      56,733
Public                                  4,590      5,562      5,928      5,202      5,686      6,400      7,260     7,225      7,021      7,080       n.a.
Private                               35,543      38,252     36,479     36,295     39,071     41,506     41,761    42,397     44,916     47,536       n.a.
Resource Gap                               617       1,848        844     -1,238       -455       -852     -1,222    -1,148       -488         210         58
Exports of Goods and NFS                 5,452       4,45i      5,890      6,149      5,099      5,125      5,366     6,400      5,844      6,996       7,242
Rate of Growth (%)                       -           -18.3       32.2        4.4      -17.1        0.5        4.7      19.3       -8.7       19.7         3.5
Imports of Goods and NFS                 6,069       6,305      6,734      4,911      4,644      4,273      4,144     5,252      5,356      7,206       7,300
Rate of Growth (%)                       -             3.9        6.8      -27.1       -5.4       -8.0       -3.0      26.7        2.0       34.5         1.9
Public Investment as % of total
fixed investment                                     -          -          -          -          -           33.0      37.4       36.5        37.6      36.9
Public Savings as % of Public
investment                               -           -          -          -          -          -           31.9      88.6       99.0        72.6      85.9
Investment Rate (%)                         22.7        23.1       22.6       17.6       19.3       19.8       18.2      19.2       20.3       22.4        22.8
Pavings Rate (%)                            21.5        19.7       21.1       19.9       20.1       21.2       20.2      21.0       21.0        22.1      22.8
Growth Rates, 1960-70:
Gross Domestic Product       3.7
Consumption                  3.6
Exports of Goods and NFS     2.9
Imports of Goods and NFS     1.9
Marginal Propensity to Save    0.26
Import elasticity               .3
I.C.O.R.                       5
Including State Economio Enterprises
Source: Central Bank, mission estimates



Table 210: NATIONiAL L4COME AGGREGATES 1969-70 AN4D PROJECTIOINS, 1971-76
(in millions of 1969 pesos)
1969        1970        1971        1972       1973        197h       1975
Gross Domestic Product         70,087      73,1455    77,495      81,757      86,254      90,998     96,0(3
(Rate of Growth 1%)           6.6         4.8         5.5         5.5         5.5        5.5        5.5
Gross Domestic Investment      15,681     16,780      18,106      19,1OC      20,153      21,259     22,428
Inventory Change                 227        -            409         431         455        480        506
Gross Fixed Investment         15,L50      16,780     17,696      18,669      19,698      20,77Y     21,922
Public Investment 1/       5,818      6,066        6,304      7,008       7,413       7,849      8,290
Private Investment         9,636      10,714      11,393     11,661      12,285      12,930     13,632
Gross Domestic Savings         15,.471     16,722     17,970      19,076      20,153      21,305     22,533
Public Savings 1/          4,227      5,213       0,817       5,675       6,154       6,503      6,895
Private S,vings           11,244      11,509     13,153      13,401      13,999      11l,802    15,638
Consumption                    54,616     56,733      59,525      62,681      66,101      69,693     73,470
Resource Gap                      210          58        136          20        -            -46       -105
Exports of Goods and NFS        6,996       7,242      7,858       8,393       8,862       9,376      9,930
Rate of Growth (%)            19.7         3.5        2.4         6.8         5.6         5.8        5.9
Imports of Goods and NTFS       7,206       7,300      7,994       8,417       8,862       9,331      9,824
Rate of Growth (%)            30t.5        1.9        3.3         5.3         5.3         5.3        5.3
Public Investment as % of total
fixed investment                 37.6        36.2        35.6       37.5        37.6        37.8       37.8
Public Savings as % of public
investment                       72.6        85.9       76.4        81.0        83.0        82.8       83.2
Investment Rate (%)            22.4        22.8       23.4        23.3        23.4        23.4       23.0
Savings Rate (%)               22.1        22.3       23.2        23.3        23.4        23.0       23.5
Growth Rates, 1971-7 :
Gross Domestic Product     5.5
Consumption                5.4
Exports of goods and NiFS  6.0
Irmports of goods and NFS  5.3
Marginal Propensity to save 0.25
Imaport elasticity           0.96
I.C.O.R.                     4.25
1/  Including State Economic Enterprises
Source: Central Bank, mission projections



Table 2.11: GROSS FIXED DOMESTIC INVESTMENT BY TYPE OF GOOD, 1960-69
(in millions of pesos)
1960    1961    1962    1963     1964    1965    1966     1967     1968     1969
Construction                        873   1,095   1,282   1,495   1,922    2,822   3,816    5,391    684      8,I486
Machinery and Equipment           1,213   1,609   1,920   1,696    2,068   2,865   3,518  4,683      5,610    6,968
Transport Equipment               389     513     606     524      757   1 153   1 329    1 703    1 930    2,255
Motor Vehicles                  3iJ     w        m      717     70-                              i w  X
Others                           25      52     115     128      46      56       85       91       99        -
Machinery                         728     977   1,178   1,023   1 112    1 450   1 859    2 577    3 266    4 254
Machinery and Equipment         6       '910  1,099     946   i    ,647        T          311
Tools                            12      19      22      18      23      42       53       70       80        -
Furniture and Containers         42      48      57      59      87      120     160      196      251
Repairs                            96     118     136     151     199      262     330      403      414      459
TOTAL                  2        2,703   3,202   3,191   3,989   5,686    7       10,073   12,456   15,454
Source: Central Bank, Mission estimates.



Table 2.12: FINANCING OF INVESTMENT, 1960-70
(in millions of 1969 pesos)
Net
Private      Private                 Foreign
Public!        Fixed       Inventory      Total     Resource   Domestic   Public      Private
Year   Investment    Investment   Investment   Investment    Inflow     Savings   Savings   Savings
1960      n.a.          n.a.          516        11,612         617     10,995      n.a.      n.a.
1961      n.a.          n.a.          -248       12,624       1,848     10,776      n.a.      n.a.
1962      n.a.          n.a.             -       12,175         844     11,331      n.a.      n.a.
1963      n.a.          n.a.          -399        9,101      -1,238     10,339      n.a.      n.a.
1964      n.a.          n.a.         1,380       10,790        -455     11,245      n.a.      n.a.
1965      n.a.          n.a.        1,509        12,000        -852     12,852      n.a.      n.a.
1966     3,656         7,423           139       11,218      -1,222     12,,440    1,166     11,274
1967    44,505          7,529           -8       12,026      -1,148     13,174     3,994      9,180
1968     4,857         8,437            33       13,327        -488     13,815     4,807      9,008
1969     5,818         9,636           227       15,681         210     15,1471    4,227     11,244
1970     6,066        10,714             -       16,780          58     16,722     5,213     11,509
1/ Including State Economic enterprises.
Source: Central Bank, Mission Estimates.






Table 3.2: BALANCE OF PAYMENTS IN 1970 AND PROJECTIONS FOR 1971-80
(in millions of U.S. dollars)
1970        1971       1972      1973       1974       1975      1976       1977       1978       1979       1980
Exports of Goods and Services          2192.0      22145.0    2397.7     2531.9    2678.8     2836.8     3007.0     3169.4    3340.6     3521.0     3711.1
Merchandise                           1 775        047.0    1-37T      2077.0     2165.7    2293.5     2431.1     2562.4     27  7  1EZ2          3    3
Non-Factor Services                   417.0       430.0      459.2      485.0      513.1     543.4      576.0      607.1      639.8     674.4      710.8
Imports of Goods and Services          2209.5      2284.0     2404.8     2532.1    2666.1     2807.1     2955.6     3154.7    3367.1     3593.8     3835.9
Merchandise                          T7Iv        i7.        IT8T      1     9    6.0   W;   2178:       7T        '         76          M7T       3029.4
Non-Factor Services                   499.5       519.0      543.3      570,1      598.7     628.6      658.5      692.7      728.8     766.7      806.5
Resource Balance (- = inflow)           -17.5       -39.0       -7.2        0.0      12.7       29.7       51.4       14.7     -26.6      -72.8     -124.8
Factor Payments                         -214.4     -254.0     -268.1     -286.8    -308.4     -332.8     -356.1     -374.8     -401.8    -433.9     -471.6
Profit Remittances (Net)       _        ff,4                            -92.0               -09735*7                                   -127.5 ;
Intereslt                             -146.0     -i64.0     -181.1     -194.8    -210.9     -229.3     -246.6     -259.3    -280.3     -306.4     -337.6
Credit                                 20.0      20.0
Debit                                -166.0    -184.0
Public and public guaranteed        -l14.0     -129.0     -127.7     -1140.2   -153.5     -170.6     -188.4     -201.6    -221.3     -239.7     -260.2
Private                              -~2.0      -55.0      -53.4      -54.6     -57.4      -58.8      -58-.2     -57.7     -59.0      -66.7      -77.4
Transfers (Net)                           -3.2       -3.2       -4.0       -4.0      -4.0       -4.0       -4.0       -4.0      -4.0       -4.0       -4.0
Current Account Balance                 -235.1     -296.2     -279-3     -290.8     -299.7    -307.1     -308.7     -364.1    -432.4     -510.7      600.4
Direct Investment (Net)               11.0       11.0       30.0       30.0      30.0       30.0       30.0       35.0      40.0       45.0       50.0
Private Sector Long-Term              51.9       47.0       33.1       56.8       29.5       9.9       11.2       31.8     116.5      160.3      207.5
Disbursements                       175.4     131,0    15    .      19.1l      195.7     20v7       234.5      28      o     .6       =W      1467.8
Amortizations                      123.5       84.0      116.9      138.3      166.2     194.1      223.3      256.8      201.0     226.5      260.3
Public and Public Guaranteed          38.4      260.4      216.2      204.1      240.2     267.2      267.5      297.3      275.9     305.4      342.9
Disbursements                       3.          17T;     U          7T                    79      7           6737       702        77T        7
Amortizations                       347.1     288.6      266.B      346.1      320.8     312.0      352.0      376.3      426.6     466.4      509.9
Short-Term and other capital (Net)   310.8       50.5             -          -          -          -               -          -         -          -
Capital Account Balance                 412.1      368.9      279.3      290.8      299.7     307.1      308.7      364.1      432.4     510.7      600.4
Errors and Omissians                       8.0       -          -          -          -         -          -          -          -          -         -
Net change in reserves                   185.0       72.7.      -          -                    -          -          -          -          -         -
Total Debt Service Ratio                 28.1       23.9       23.6       26.8       26.1      25.9       27.3       28.2       27.2      28.4       29.8
Public and Public guaranteed             21.0       18.6       16.5       19.2       17.7      17.0       18.0       18.2       19.4      20.1       20.8
Source:  1970-71: Central Bank; 1972-80: Mission Projeotions.



Table .3    O2?ODIT EXPORTS, 1960-70
(Value: 05$ ellitune; Volume: '000 of tone)
1960       1961     1962      1963      1966      5965     1966      1967      1968       1969      1970
1. Principal Agricultural Products                     446.3     309.6    515.8     429i5     637.2    765.6     7116.7    590.10    507.9     575.9
1. Cereals                                         316.9     183.3    351       278.8     699.1    5759      50io      399.0     312.2     U626.
a.oCrs
Value                                        126.2      82.8    121.5     126.5     1c8.0     153.6    200.7     223.5     139.8     196.6       276.9
Volose                                     2,570.0   1,730.1   2,931.0  2,467.0   3,375.5   2,802.2  3,751.5   6,317.8   2,892.6   6,024.0     5,369.0
85$ per Tee                                   48.3      47.8     61.6      51.7      50.3      56.8     53.5      51.7      46.3      65.4        51.3
b. W1.Aet
Val...                            lh~~~~~~~12.7  65.6  173.6   116.6     242.3    372.7     279.6     122.1     138.9     138.5       126.0
Volum                                      2,685.8   1,065.5   2,832.3  1,83 0.7  3,710.0   6,660.6  5,054.7   2,059.7   2,623.1   2,366. 3    2,317.0
08$ Per Too                                   57.6      61.5     61.2      63.5      65.3      55.9     55.3      59-.2     17.3      59.1        56.3
c. Sorghum
Voice                                          2.6       9.9     IL.6      21.1      26.1       b.7     36.7      22.6      22.6      53.7
Volume                                        58.4     271.3    666.3     516.5     68,9.0    1 66.9   966.o     507.7     523.6   1,335.2     1,977.0
U5$ per Toe                                   41.1      36.4     32.8      60.8      60.2      60.1     38.7      66L.1     6 3.1     62.2
d. Other Cereals                                 47.6      25.0     35.6      16.8      62.7     62.9      26.7      31.0      60. 9     29.6
2. Oilo                                             71.5      76.9     99.1      69.2      55.3     82.0      69.9      78.       3o.3  ~    6_
a. SLnseed
Value                             ~~~~     ~~~~~0.7  50.2  58.8  61.7    60.9      66.8      21.0      35'.1    ISo        30.2
Volume                                       169.0     216.6    266.1     212.9     205.1     239.1    121.5     211.3      91.2     1.6.3       155.0
25$ per Toe                                  260.8     2L15.6   222.6     195.5     199.6    195.7     172.5     166.1     189...    205. 0
b. Tong
Value                                          7.3       8.1     10.9      11.5       8.8       5.5      5.2       5.7       3.8       6.7
Volume                                        19.6      16.6      i6.6     16.0      18.7      11.6     16.7      25.6      18."      23.6        16.0
U1$ per Ton                                  376.2    ?12.2     066.6     718.7     6 70.-5  676.1     353./     226.,0    21~5.6h   283.9
V.lue                                          5.2       0.3      6.6       6.5       5.6       3.7       -.2      5.9       3.7       7.7
Volume                                        11.6       C.0      9.2       7.o       9.8      6.8       7.7       9.8       3 .2     13.5
21$ per Too                       6~~~~~~~~~~~      ~~~~~~5o.1  500.0  678.2  855.2  551.0  770.8  675.3  602.0  '11.5     7.
d. Pecant
Value                                         15.1       9.6     21.9       9.1       0.7      17.1C    19.7      15.1      16.o-     10. 6
Volum                                         50.6     310.8     98.5      36.6,      0.5      ul.9     79.2      62.6      69.5,     39.0
U5$ per Too                                  298.6     305.1    222.3     2510.0    600I.0    276.6    268.7     261.9)    237.6     221.7
e. Swallower
Vaubs                                          3.2      5..       3.1       OQ,         -       90      18.5~     17.1      15.o       1.7
Vol1me                                        13.6     31.0      I'.?       6.i         -     33-5      76.0      8i.o      80.0o      7.3
01$ per Too                                  235.2     277.o    208.23    20L.5         -     253.5    26o.o     012.8     105.0L    232.0
3. Pellets wed Eopellers                            31.0      29.0     03.7      69.8      569      71.       01.9      05.4      57.       51.1i
6. Prulto                                           26.9      20.6     27.9      61,2      27.9     37.1      30.2      66.7      50.       51. 7
II. PrincIpal Li-est-k Prodooto                        655.6     662.3     692.2     6055  5  -39.6     515.2     635.3     u16.2    56o.l      639.3
1. Beef
Valu                                            168.1     170.3    183.0     2o.151    261.3     2o2.5    236.1     277.1     265.1     326.7
Volume                                          331.3     3355.7   669?.7    els       6u2,C, h.3  388.1  65c.2     65 7. 2       ?     )9
21$ per Too                                     507.6h   507.3     LOS.9     630.1    1539.2    676.6     o66.7     oW!       700.5      60
a.Frozen 0Warters with Bo,e
Value                                          7.0       7.1     11.2      20.5       6.0     5c.1      7o.3,     51.0j     35.)      39.0
Volume                                        17.6      18.1     32.9      57.      13.8      32.9     13o.7     111.7      73.9      83.6
U$per Too                                  611.7     386.2    367.6h    3w2.3     509.0     o~03.l   51q.c     653.-.    685.?     6 67.1
b. Chifled Q-et-r vith Boer
Valu                                          97.1      70.2     61.o     119.2     12o-9    111.1~     87.0      37.1      22.2      66.1I
Volume                                       218.1     173.5    230.2     310.5     207.1     178.o     ,   1.  0251.0     3t.? -    19.1
U$p.r Too                                  665.2    656)b.6   356.6     360.6     516.1     62w,.3   501.7     659.2     o016. 9   556.9
c. Frozen Cuts
Value                                          0.5      1).8     01.8       8.0       6.2      10.51    i6.i      2c.l      3D.0      66.5
Volume                                         1.0       i.e'     1.8      17.0      10.5      17.9     18.o,     36.5      69.1      92.9
US$ p- Too                                   .00.0     500.0    666.6     w66.9     59~0.6    813.9    896.6     75-.5     733.2     696.3
d. Ilanuouctured
Va-luei16.0c                                            28.8     39.2      62.5      61.0      39.1     5.0.I     51.u      35.o      67.2       51.8
Volume                                        37.1      69.3    116.8     119.2      71.7     52.8      77.1      88.6      70.8     102.2       97.0
05$ per Ten                                  631.2    615.5     335.1     356.5     571.8     260.1    o69.8     575.o     502.8     661.6      536.0
e. Cured and Cooked (corced beef)
Value                                         37.9     51.3      37.8      50.1      36.3     28.8      60..      o3.3      e8.3      63,3
Volume                                        65.7     58.7      52.2      70.3      65.2     36.8      boo       71.5      76.3      72.2
US$pe  Ton                                 829.3     873.9    726.1     712.6     758 .8   827.5     858.3     885.31    116.7     876.6
±. Cooked wed Frozen
Value                                          2.7      5.3       5.64      6.2       3.7      7.8      11.2      17.7      31.7     37.9
Volume                                         2.3      6.2       6.6       6.9       3.1      6.3      13.3,     1i.1      2o.5     28.5
00$ per Too                                1,173.9   1,761.9  1,173.9   1,2b5.3   1,193.5   1,238.1  1783      1, 099.3  1,I9o.2   1, 330.72
g. Prepard with Vegetables
Value                                                     -       1.8       1.9       1.3      1.7       3.3       2.1,      6.0      3.6
Volum-.                                                           2.9       2.9       1.9      2.2       3.9       2.9      6.8       6.7
05$ per Toen                                                    620.6     655.1     68w.2     772.7    66t-l     127.5     833.3    802.0
h. RIoast Beef
Value                                          3.o      3.7       2.e       6.8       2.0      0.0       1.7       1.6       1.9      2.7
Vel-m                                          6.0      6.1       3.3       6.6       2.6       1.2      2.0       1.o       2.1      3.0
01$ per Too                                  900.0C    925.0    787.8     727.2     833.3     833.3   a8~ .o     573.      904 )i.7  693.3
a.Chilled Iota
Value                                          3.1       3.2      2.1,      8.0)      7.9      6.0        .        3.7       9.7     26.2
Volume                                         5.7       6.3      5.0)     16.3      11.6      6.6      31.2      31.1      11.8     27.1
05$ per Too                                  563.8     507.9    3,20.3    690.8     68i.o     937.5    812.;     725.      5 22.0   89~.6



Table 3. 3
PAGE 2
'ox           IOc6       L,oh      J<')      196        1967      1968         1969     17
2. Lamb and Miutton
Value                                             1~2>.                                                                               13.7       14.9
Volume                                                          .       i.2                                                5 7.2      35.7       38.2
UL23 per To::-                                                                                                            386_.:    383.7       390.2
hiorse Mieat
VaLue                                                                                      '.1     ~~~~    ~   ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~263.2  21.5
Volume                                                                                                           oz.                  7b        361.0
US$ p)er Ton                                                 2>.3 I-                                                                  534.
6. Other MeatsG, 0: itls and hsbopuu.,˝.?                                                                       6L         2.       L9.8     ~
heat Extrac,ts
Vo lum e3-
US$ net Ion                                                                                   1            '>f      ,',uo       3˝        6 2 4314.2
a.  Other M-eaits a:mad J::
4:05                                                                                                                                        5J. 
V 0.015,0                                                                                               ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~152. c
22$ net Tor:                                                                                                                                32-.,
Ottecr tEes, ;ca:, k,u r.                                                                                                        1),47 7
C, WoW                                                                                                                           a 2' L
a.Greasy
Vaiue                                                                                                       P'                   3'
Voc ,Lume                                                                               7                                         1
72$ pet  a:                                                                                '~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~8-  712 8  (Nt7 9
Value                                                                                                       3'7.1
Vorlume
Value                                                                                                         27                  3.          4.5
U58 per T'on                                                                                                                               4'67u6
7. Li-ve tnThT&O'ts                                                                                                                      31..       3206     21.9
11. Other AaslMs ods:al?nus                                                                       2'  7               '3        c1                    396 5
i.1.Main industr.i'al Pzna,u:->2.
2.   ___e Oil9')                                                                                                                                    1
2. Fuel Oil                                           82~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~j                             9           .
3. Otner                                            17 b____I_                          .____  198- 3    la        2 -o      213$.      255o3      363 1
GRAnT TOTAL                                        21 ___ iI~ D. [a.           37,         i  i     I  0      2j3-7       1,612.1
Source:  National Statistica Institute and Ministry of Economy asd Lasror



Table 3.4:    PRINCIPAL INDUSTRIAL PRODUCTS-EXPORTS. 1960-1969.
(in thousands U.S. dollars)
1960      1961     1962        1963       1964       1965       1966      1967       1968       1969 j
1. Printed Material and Books                    500       643       551       2,883      9,805     8,865      10,188     11,122     13,731    17,474
2. Calculating and Statistics Equipment           -        227        64        885      5,844      6,373       7,248     12,190     10,438    13,176
3. Combustion EngLnes                             -         43         4         33        193        144       1,976      3,820      3,927     2,950
4. Automobile Parts                              100        68        47         488     1,433        817       1,665      2,973      3,906     5,545
5.  Electronics and Electric Equipment           700     1,499       364        303        501        774         660        238      1,111     1,365
6. Cellulose and Polyethelene                    100        97        71         221       792      1l,31       2,062      1,114        822       525
7. Steel Products                              1,900     1,029       526     11,262     11,969      5,773       6,341      7,211     12,713    11,810
a. Cables                                 ( 800)    (   68)   (   44)    ( 3,534)   ( 5,020)   (1,082)    ( 2,262)   ( 2,832)   ( 3,272)   ( 1,400)
b. Pipes                                   ( 100)   (   55)       4 49)  ( 3,917)   ( 5,969)   (4,141)    ( 1,906)   ( 2,400)   ( 6,912)   ( 8,850)
c. Bars                                       -     ( 365)    ( 219)     ( 3,600)   (  748)    ( 254)     ( 1,646)   ( 1,047)   (   940)   (  270)
d. Wire                                   (1,000)   ( 541)    ( 214)     (   211)   (  232)    ( 296)     (   527)   (   932,     1,589)   ( 1,290)
TOTAL                                          3,300     3,606     1,627      16,075     30,537    24,177      30,140     38,668     46,648     52,845
1/ Preliminary and partially estimated.
Source: National Statistics Institute, Ministry of Economy and Labor and missim estimates.






Table 3.5:   STRUCTURE OF MERCHANDISE EXPORTS, 1960-1970
(percentage distribution)
1960      1961     1962      1963      1964      1965     1966      1967      1968      1969     1970
1.   CEREALS                            29.4      19.0     28.4      20.4      35.4      38.7      34.1     27.2      25.0      25.8      29.6
Wheat                               13.2      6.8      14.3       8.5      17.2     25.0      17.5       8.3      10.2      8.6       7.2
Com                                11.5       8.6      10.0       9.3     11.9      10.3      12.6      15.3     10.2      12.1      16.0
Sorghum                             0.2       1.0       1.2       1.5      1.9       0.4       2.3       1.5      1.6       3-3       4.8
Others                               4.5      2.6       2.9       1.1      4.4       2.9       1.7       2.1       3.0      1.8       1.6
2.  VEGETABLE OILS AND BY-PRODUCTS       9.5      11.0     11.7       8.8       7.8      10.2      8.3       9.9       8.3       6.7      7.9
Edible                              2.2       1.9       2.4      1.2       0.4       2.0       2.7       2.6      2.5       1.2       2.3
Industrial                          4.4       6.1       5.7       3.9      3.5       3.5       1.6       2.8      1.6       2.3       2.2
Pellets and expellers                2.9      3.0       3.6       3.6      3.9       4.7       3.9       4.5      4.2        3.2      3.4
3.  FRJITS                               2.3       2.1      2.3       3.0       2.0       2.5      2.5       3.2       3.8       3.2 2.4
4.  LIVESTOCK PROUJCTS
(a) MFAT PRODJUCTS                    20.3      22.5     18.8      24.5      23.3      22.1      25.2     26.9      24.5      25.9      24,4
Beef                                15.6     17.7      15.0      19.2      18.5     17.6      18.4      18.9      17.9      20.2     18.9
Lamb and mutton                      1.4      1.1       0.9       1.0      o.6       0.9       1.2       1.5       1.0       1.0      0.9
Horse                               0.5       0.6       0.7       0.8      1.4       1.1       1.4       1.6      1.9        1.3      1.6
Other meat products                  2.8      3.1       2.1       3.5       2.8      2.5       4.1       4.9       3.6       3.4      3.1
(b) Hides and skins                    6.5       8.2      7.5       5.7       4.1       3.4      5.2       5.4       5.4       6.1       5.7
(c) Wool                              13.5      14.8     11.9      11.8       9.1       7.5      7.8       6.8       7.5       5.7       5.9
(d) Live animals                       2.0       2.5      2.3       2.4       1.7       1.6      1.6       2.9       2.6        2.0      2.0
5.  OTHERS                              16.6      19.9     17.1      23.5      16.6      14.0      15.3     17.8      22.9       24.6     22.1
TOTAL:               100.0     100.0     100.0    100.0     100.0     100.0     100.0     100.0    100.0     100.0     100.0
Source: Table 3.3



Table 3.6:  MAJOR COMMlDITY EXPORTS, 1960-71; PROJECTIONS, 1971-76
(in millions U.S. dollars)
Ce r e als                  Vegetable Oils and By-Products                               Li ve s t ock       P r  dnua t s
Pellets and                       Lamb and       Other Meat Total Meat Hides and           Live
Year       Wheat Corn Sorghum   Others Total Edible   Industrial Ex-Pellers  Total  Fruits   Beef  Mutton   Horse Productsi   Products     Skins   Wool    Animals Others Total
1960       142.7 124.2   2.54    57.6  316.9   23.5     58.0        31.0     102.5   24.9    168.1  15.6     5.6     30.7      219.0       70.2     145.3  21.1    179.3  1,079.2
1961        65.6   52.8  9.9     25.0  183.3   18.3     58.6        29.0     105.9   20.5    170.3  10.4     6.1     30.2      217.0        78.9    152.4  24.o    192.2   964.1
1962       173.5 121.5  14.6     35.6  355.1   29.6     69.7       53.7      142.8   27.9    183.0  11.5    8.o      25.6      228.0       91.5     144.9  27.8    208.0  1,216.0
1963       116.4 126.5  21.1     115.8  278.8  16.5     53.2       49.8      119.5   41.2    261.5  14.5    10.5     47.6      335.0       78.0     160.6  32.9    320.5  1,365.5
1965       242.3 168.0 26.1      62.7  499.1    S.6     49.7       54.9      110.2   27.9    261.3   8.3    19.9     39.5      329.0       57.7     128.4  24.5    233.7  1,410.5
1965       372.7 153.6   6.7     52.9  575.9   29.7     52.3        70.4     152.4   37.1    262.5  12.9    16.9     36.7      329.0       50.3     111.8  23.9    207.6 1,488.0
1966       279.6 200.7 36.7      26.7  553.7   43.7     26.2       61.9      131.8   39.2    295.1  19.7    22.3     64.9      401.0       83.7     125.6  26.0    243.2  1,593.2
1967       122.1 223.5  22.5     31.0  399.0   38.1     50.8       65.5     1i4.3    46.7    277.1  22.0    23.1     71.6      394.0        78.7     99.5  42.0    260.3  1,464.5
1968       138.9 139.8 22.6      50.9  342.2   33.9     22.4       57.8      114.1   51.6    245.3  13.7    26.2     49.8      335.0       73.3     102.9  34.9    313.9  1,367.9
1969       136.5  194.6 53.7     29.4   416.?  1 .0     3d.9        51.1     108.0   55.7    326.7  14.9    21.5     55.3       417.5       98.0     95.1   32.6   391.1 1.612.1.
1970       126.0  275.9 516. 0   32.3  5139.2  41.7     39.3        60.5     142.0   LB.S    338.0  15.5    28.0     56.o      437.5        97.0     87.0   21.9   521.9  1,775.0
1971        47.0  308.0 110.4    41.5  506.9   39.5     33.5        65.o     137.0   45.0    368.0  10.0    28.5     59.0      465.5       104.L     91.5   28.1   436.6  1,815.0
1972       117.5  274.7 114.3    52.0  548.5   40.5     34.0        66.5     141.0   60.5    401.0  10.0    29.5     62.0      503.5       106.9     93.2   29.6   455.2 1,938.4
1973       125.1 295.8 127.1    5t3.0   591.0  141.5    35.5        69.0     145.0   66.5    431.-3  10.0   30.0     65.0      536-3       109.4     95.8   31.1   471.9 2,047.0
1975       133.3 320.1 139.0R    43.5  636.    52.5     35.0       72.0      149.5   73.0    463.8  10.5    31.5     68.o       573.8      112.4     97.5  32.6    590.1 2,165.7
1975       1152.0 357.6 152.8   45.5   ooc. 9  43.5     35.5        75.0     155.0   80.5    500.3  11.0    32.5     71.5       61.5.3     115.5     99.2  34.1 ,8.1       2,293.5
1976       151.2  378.2 167.5    45.5  742.4   44.5     36.0       78.0      158.5   88.5    550.2  11.5    33.5     75.0      660.2       118.4    100.9  35.6    526.6 2,431.1
/1  Meat extract and offals.
Soulrce: Central Bank, Ministry of Economy and Labor; Statistics Institute, and Mission estiastes and projectiQns beginning in 1972.
Note: The commodity projections were made on the following assumptions:
Wheat: The volume of exports will increase between 1965-69 and 1976 by 25 percent. Unit values will fall at about one percent per year.
Maize: Export volume will grow at about 2.5 percent per year beginning in 1972. Unit values will increase at about 1.5 percent per yea;r.
Sorghum: Unit values will remain constant; volume of exports will grow at 5 percent per annum.
Vegetable Oil and By-products: Most of the expected growth in earnings will conie fror. increased demand for cilcakes.
Edible oil unit values are expected to decline at about 2 percent per annum. Industrial oils unit values wil.l remair:
Beef: "roduction will grow at 1.2 percent per year, with domestic demand growing at one percent and export demand about
2.5 percent. Unit values will grow at about 3 percent per annum, reflecting increases in value added.
Horsemeat: Export volumes account for most of the expected growth in value.
Lamb and Mutton: No growth in volume and some decline in unit values.
Hides and Skins: Slight increases in volume and higher unit values from increased value added.
Wool: Volume will remain close so 1970 levels and unit prices grow at 1.5 percent per year.



Table 3.7: PERCENTAfGE DISTRIBUTION - VOLUME OF BEEF EXP.ORTS
1960      1C61     1962      1963       1964      1965      1966      1967       1968      1969
1.  Frozen quarters with bone                5.2       5.4      7.3       9.4      24.4      23.9       30.0      24.4      21.1      16.9
2.  Chilled quarters with bone              65.8      51.7     51.2      51.4      44.3       46.o      34.1      27.4      10.5      16.1
3.  Frozen cuts                              0.3       0.5      0. I      2.9       2.2        3.3       3.5       7.5      14.0      18.8
L. .Manufactured                            11.2      20.6     26.0      19.6      15.3      13.6       16.9      19.4      20.2       20.7
5.  Cured and cooked (corned beef)          13.8      17.5     11.6      11.6       S.7        9.0      10.2      15.6      21.3       14.6
6.  Cooked and frozen                        0.7       1.2      1.0       o.8       0.7        1.6       2.9       3.5       7.6        5.8
7.  Prepared with vegetables                  -         -       o.6       0.5       0.4       o.6        0.8       o.6       1.4       1.0
8.  Roast beef                               1.2       1.2      0.7       1.1       0.5        0.3       0.4       0.3       0.6        o.6
c   Chilled cuts                             1.7       1.c      1.1       2.7       2.5        1.6       0.7       1.1       3.4       5.5
Total beef                             100.0     100.0    100.0     100.0     100.0     100.0      100.0     100.0     100.0     100.0
Source: Mlinistry of Economy and Labor-



Table 3.8t PERCENTAGE DISTRIBUTION - VALUE OF BEEF EXPORTS
1960     1961     1962     1963      1964     1965      1966     1967      1968     1969
1. Fozer quarters atth bone               4.3      4.1      6.1      8.0     22.2      21. 4    26.0      19.5      14.6     11.9
2. Chilled quarters with bone            57.8     41.2    141.6     145.6    L,o.9     42.5     25.8      20.8      9.0      13.5
3. Frzen cuts                             0.3      0.5      0.4      3.0       2.4      14.0     5.5       9.4     1L.7     19.7
M Manufactured                            9.5     16.c     21.14    16.2     15.7      14.9     17.0      18.14    14.5      14.4
5. Cured and cooked (corned beef)        22.5     30.1     20.6     19.2     13.1      11.0     13.6      22.8     27.8      19.4
6. Cooked and frozen                      1.6      3.1      3.0      2.4       1.4      3.0      5.5       6.1s    12.9      11.6
7. Prepared with vegetables                -        -       1.0      0.7      0.5       o.6      1.1       0.9      1.6       1.2
8. Roast beef                             2.1      2.2      1.4      1.8      0.8       0.4      0.6       0.5      o.8       o.8
5. Chilled cuts                           1.8      1.°      1.4      3.1       3.0      2.3      0.9       1.3      4.0      7.14
Total beef                          100.0    100.0    100.0    100.0     100.0    100.0     100.0    100.0     100.0    100.0
Source:  Ministry of Econonv and Labor



Table 3.9:   GROWTH IN EXPORTS, 1960-68, AND PROJECTIONS TO 1976
(Per centages)
Contribution to Growth
Item                b                in Exports                         Annual Growth Rate                  Share in Total Exports
1960 to 1968  1968 to 1976    1960-1968   1964-1968  1968-1976   1971-1976    1960-61   1967-68  1976
Miscellaneous Exports /2                       25.9          15.-4           3.4        7.3        6.7         6.2        17.7      16.1    17.9
Main Industrial Products                       15.0          14.d          149.2       14.1        9*7         9.4        0.3        3.0     4.0
Meat other than Beef                           13.4           2.8           11.7       11.9        3.7         4.2         4.8       7.3     4.9
Frozen Beef Cuts                               12.3           ...           75.8       55.7        ...         ...         0.1       2.2     ...
Cured and Cooked Beef                          10.5           ...            4.3      24.2         ...         ...        4.4        4.6     ...
Cooked and Frozen Beef                         10.0           ...           30.3      66.8         ...         ...        0.4        1.7     ...
Frozen Beef Quarters                            9.9           ...           33.7       -9.5        ...         ...         0.7       3.2
Oil Pellets and Ex-pellers                      9.3           1.9           10.5       0.3         3.8         4.0         2.9       4.3     3.2
Fruit                                           9.2           3.5           10.5       15.7        7.0        14.5         2.2       3.5     3.6
Sorghum                                         7.0          13.6           22.4        9.6       28.4         8.7        0.6        1.6     6.9
Manufactured Beef                               6.8           ...            9.3       -0.2        ...         ...         2.2       3.0     ...
Maize                                           5.4          22.4            8.0       0.1        13.2         4.2        10.1      12.8    15.6
Live Animals                                    4.8           0.1            5.5       13.6        0.2         4.8         2.2       2.7     1.5
Fuel and Mining                                 3.9           ...           54.9       13.9        ...         ...         0.0       0.7     ...
Other Beef                                      3.1          L1.8            5.5        5.3        ...         ...         0.7       0.8     ...
Vegetable Oils (excluding linseed)              2.4          -1.14           5.0       23.9        ...         ...         2.8       2.9     ...
Prepared Vegetable Foods                        1.7           ...           22.4       16.6        ...         ...         0.1       0.4     ...
Hides and Skins                                 1.1           4.2           -0.8        9.7        6.2         2.5         7.3       5.4     4.9
Wheat                                          -1.3           1.2            6.7     -20.0         1.1        26.3        10.2       9.2     6.2
Other Cereals                                  -2.3           0.4            0.9     -11.1         1.2         1.9         3.6       2.5     1.9
Linseed Oil                                    -7.6          -0.2           -9.7      -17.0        ...         ...         4.4       1.9     ...
Wool                                          -14.7          -0.2           -5.1      -5.14       -0.2         2.0        14.1       7.1     4.2
Chilled Beef Quarters                         -25.9           ...          -10.2     -31.7         ...         ...         8.2       2.8     ...
Total Exports                               100.0         100.0            4.8      -0.8         7.5         6.o       100.0      100.0  100.0
&   Ranked according to first column.
12  Mainly quebracho, tea, sugar and dairy products; excluding prepared vegetable foods, live animals, fuels and minerals.
Source: IBRD Staff.



Table 3.10: GROWTH IN EXPORTS, MAJOR COMMODITIES, 1960-69 AND PROJECTIONS TO 1976
(Percentages)
Contribution to
Item 4                        Growth in Exoorts                   Annual Growth Rate                   Share in Total Exports
1960-1965   1965-1976     1960-1968   1964-1968  1968-1976   1971-1976     1960-61   1967-68   1976
Miscellaneous Exports 4                   36.4       15.4           4.7        13.0         6.7         6.2         20.0      19.9     17.5
Beef                                      26.7       27.7           6.8        -0.7        10.4         8.0         16.6      18.4     22.2
Main Industrial Products                  15.0        4.5          49.2        14.1         9.7        9.h           0.3       3.0     4.o
Meat other than Beef                      13.4        2.8          11.5        13.4         3.7        4.2           4.8       7.3     4.9
Fruits                                     9.2        3.5          10.5        15.7         7.0        14.5          2.2       3.5     4.9
Cereals                                   8.8        37.6           7.4       -10.6        10.2        7.9          24.5      26.2    30.5
Vegetable Oils and By-products             4.o        4.2           2.4        -7.1         4.2         3.0         10.2       9.1     6.5
Hides and Skins                           1.1         4.2          -0.8         9.7        6.2         2.5           7.3       5.4     4.9
Wool                                    -14.7        -0.2          -5.1        -5.4        -0.2        2.0          14.1       7.1     4.2
Total Exports                          100.0      100.0           4.8        -o.8         7.5         6.o        100.0     100.0   100.0
/1 Ranked according to column 1.
,2 Mainly quebracho, tea, sugar and dairy products.
Source: IBRD Staff.



Table 3.11: TAX RATES FOR PRINCIPAL EXPORTS AT SELECTED DATES
(percent of f.o.b. value of exports)
Exports as
Percent of
Total  Exports    June    Dec.   June    Dec.     June     Apil      July     Dec.
in 1968          T   6IT                     -196                1970     1970
Cattle                              2.2         25      25     25      22       22        22        30       n/a
Chilled & frozen beef               7.2         25      18     18      15       15       12         20        5
Chilled & frozen special
beef cuts                         3.8         25      12     12      10       10        6         15        0
Cooked beef                         2.3         16      -      -       -        -         -          8       n/a
Canned meat                         5.4         16      8      8       -         -        -          8       n/a
Meat.extract                        1.1         16      8      8        -        -        -         n/a      n/a
Horse meat                          2.0         25      18     18      15       15        12        n/a      n/a
Offals                              1.0         25      18     18      15       15        12        n/4      n/a
Greasy wool                         4.6         25      18     18      12        12       10        n/a      10
Washed and carbonized
wool                          2.7         20      12     12      6        6         4         n/a       4
Raw cattle hides                    3.0         25      25     25      25        25       25        35       n/a
Wheat                              10.2         25      18     18      6         6        6         17       17
Corn                               10.2         25      25     18      8        8         8         19       19
Sorghum                             1.7         25      25     18      18        8        8         19       19
Cereil by-products                  2.3         25      25     18      18       12        8         n/a      n/a
Linseed Oil                         1.1         25      25     25      25       12        12        22       22
Sunflowerseed oil                   1.1         20      8      8       8         8        8         n/a      19
Groundnut oil                       1.1         20      20     12      12       12        12        n/a      22
Oilseed by-products                 4.3         25      25     25      18       18        12        n/a      22
Apples and pears                    3.6         20      -      -        -        -        -         10       n/a
TOTAL                    70.9
Sources: National Statistical Institute; National Meat Board; and Ouia PrActica del Exportador e
Izportador (various issues) July 1970; US Department of Agriculture; n/a- not available.



Table 3.12: IMPORTS BY MAJOR CATEGORIES, 1960-70
(in millions U.S. dollars)
1960      1961     1962      1963     1964      i965      1966      1967      1968        1969     IM7()
I.  Capital Goods                             420       494      556       372      209       155       203       218       258         333      390
II.  Consunwr Goods 1/                          50        72       69        49       60        74        94         93        81        155       70
1.  Durables and non-durables              23        41       41        24       32        46        48        45        48         68       40
2.  Food Products 1/                       27        31       28        25       25        28        46        48        33         87       30
III. Oil aid Lubricants                       .156       130       92        57       84       115       106        94        84         101       96
IV.   Intermediate Goods 2/                   623       764      639       503      724       855       719       691       746         967   1,1fi
1.   Mineral Products                      11        10       13        15       22        25        25        25        22         33       k6
a.  Cement(-)                                 ( - )  ( - )  ( - )           -____                                               (9)      (6)
b.  Others                          (11)      (10)     (13)      (15)     (22)      (25)      (25)      (25)      (22)       (25)       (40)
2.  Chl5           .1 13 i± 1iO5      i67       192       130       146       153         179      205
3.   Plastics and Rubber 3/                -         _   -         -             -         -         40        41        41          54      57
4.   Lunber                                35        52       35        32       43        58        56        48        62         79       75
5.   Paper and paper pulp                  42        64       42        41       58        75        79        65        77         91       99
a.  Newsprint                       ( 26)     ( 34)    ( 22)     ( 22)    ( 27)     ( 37)     ( 39)     ( 39)     ( 40)       (51)      (5o)
b.  Paper Pulp                      (12)      (21)     (14)      (14)     (25)      (31)      (28)      (20)      (25)       (27)       (35
c.  Others                          (4)       (9)      (6)       (5)      (6)       (7)       (12)      (6)       (12)        (13)      (1
6.  Metals & Metal Products 4/            183       253      152        90      167       254       205       196       195        291      346
a.  Steel Bars                        -         -        -         -        -         -       ( 31)     ( 30)     ( 27)       ( 90)     (84)
o.  Steel Plates                      -         -        _         _        _         _       (26)      (36)      (23)       (42)       (60)
c.   Tin Plate                        -         -        -         -        -         -       (26)      (28)      (30)        (28)      (27)
d.  Aluminium                         -         -        -         -        -         -       ( 20)     ( 17)      ( 22)      ( 32)     (38)
e.   Copper                           -         -        _         _        _         _       (31)      (21)       (26)       (36)      (11)
f.  Others                            _    -         -             -        -         -       ( 71)     ( 64)      ( 67)      ( 63)     (96)
7.  Transport Materials 4/                                                                           47        40        40         61       63
8.   Spare parts or machinery 4/          237       247      2bl       220      267       251        69        71        82         109     124
9.  Other intermediate goods 14/                                                                     68        59        74         90      139
TOTAL                               1249      1460     1357       981     1077      1199      1124      1096      1169       1,576    1;710
1/ Differ from Central Bank Classification since includes raw material for the food industry which are included in Intermediate Goods
categories according to the drusells Nomenclature.
2/ See footnote 1/.
7/ 1960-65:Included in chemical products.
17/ Breakdown on a comparable oasis not available since Argentina shifted to the Brussels Nomenclature in 1966.
SOURCE: Central Bank and IBRD estimates.



Table 3.13: STRUCTURE OF MERCHANDISE IMPORTS, 1960-1970
AND PROJECTED 1971-1976
(percentages) 2
Intermediate
Goods
(Excluding
Consumer     Fuel and      Fuel and   Capital
Year           Total    Goods      Lubricants)    Lubricants  Goods
1960            100      4.0          49.9           12.5     33.6
1961            100      4.9          52-.4           8.9      33.8
1962            100      5.1          47.1            6.8     41.0
1963            100      5.0          51.3            5.8     37.9
1964            100      5.6          67.2            7.8     19.4
1965            100      6.2          71.3            9.6     12.9
1966            100      8.3          64.1            9.6     18.0
1967            100      8.5          63.0            8.6      19.9
1968            100      6.9          63.8            7.2     22.1
1969            100      9.8          62.7           6.4      21.1
1970            100       4.1         67.5            5.6     22.8
2/          1        3                    69.7
19717           100      3 1                  69.7            27.2
1972            100      4.0                  71.6            24.4
1973            100      4.0                  70.8            25.2
1974            100      3.9                  70.0            26.1
1975           100       3.9                  69.2            26.9
1976           100       3.8                  68.3            27.9
2/ Figures may not add to 100 due to rounding error.
v/ BCRA estimate.
Source:  Table 3.12 and mission estimates.



Table 3.14: STRUCTURE OF IMPORTS IN RELATION TO CONSUMPTION, MANUFACTURING VALUE ADDED, GROSS FIXED INVESTMENT AND GMP, 1960-1970
(in millions of pesos)
Imports of                                                    Imports
Imports of'                Value      Tntermediate             Imports of                               of
Consumable   (3)/(2)     Added in     Goods (Excl.   (6)'(5)   Fuels and    (8)/(5)   Gross Fixed    Capital   (11)/(10)   Total          (13)/(1L
vear                                   Goonsunion  ods  (%)  4ariura,turing   Fuels)        (W      Lubricants      )        nvestment     Goods                Imports  GNP      (
5'     I6~~~~~~~~~~~~~  W  ~~~~~~~~~uA  ~~~~~~~~6)Iu,- CiO'                                                           (1)          12)       (13)    (1L)     (15)
1960                       (,05          20         0.26        2.000          73Y         1a.Y5       2y          L.5h      2,sJ86          348      16.68      1,036   9,565   10.83
1961                      9,201          35         0.38        3,421          658         19.21       108         3.15      2,703           409      15613      1,210   11,380  10.63
1962                     11,153          47         0.42        4,166          758         18.19       105         2.52      3,202           633      19.77      1,543   14,051  10.98
1963                     13,943          33         0.24       91,952           730        19.74        79         1.60      3,192           514      16.10      1,356   17,322   7.83
196L                     io,977          44         0.23        6,959        1,'53         16.13       118         1.70      3,99°           292       7.32      1,507   23,601   6.39
1965                     25,965          77         0.30       10,257        1,988         19.51       194         1.89      5,686           261       4.59      2,020  32,781    6.16
1966                     32,452         100         J.31       12.097         1,587        13.12       299lI       1.85      7,334           421       5.74      2,332   40,374   5.78
1967                     L1,533         151         C.36      12,537          2,9495       16.82       311         2.14     10,073           721       7.16      3,628   51,890   6.99
1968                     4o,665         168         0.34       16,838        2,727         16.20       2y4         1.(.5    12,456           903       7.25      4,092  60,893    6.72
1969                      5!9,616       292         0.44       10,976         3,759        19.o1       359         1.86      15,454        1,16?       7.52      5,516   69,313    7.96
2°7C-                    l69,325        ?63         0.9]       22,926         4,328        18.88       360         1.57      19,048         1,463      7.68      6,413   82,567    7.77
Source: Central Bank, IBRD estimates.



Table 3.15k EXTERNAL C0MOERCE 8y ARBAS ANDs Bo oUNThIES, 19t0-69
(percentage distribution)
Countriesa                                  x   P   0   RT                                      I   Y             T    s
and
Area  Average  1966  1967   1968    1969                    average        1%6     167    1968    169 y
1960/65                                                     1960/65
P aR C BN TOA BS                                               P BR C BNTA O Rs
latin Amwican Ass. of
Free Coierce              14.6         15.9    19.4    24.7   21.3                      15.8         22.5    23.2    23.5    22.7
Bolivia                     °.5          0.5     0.6    0.9     1.2                       0.2          0.2     o.6     0.1    0.7
Brasil                      6.0          6.2     6.9     9.4    7.9                       7.3         11.7    11.3    11.8    10.9
Colombia                    0.5          0.7     0.6    0.7     0.5                       0.4          0.9     0.7     0.4    0.6
Chile                       3.4          3.7     5.1     5.7    4.8                        1.8         2.8     3.4     4.2     4.6
Ecuador                     -            -       0.1    0.1     0.1                        -           0.3     0.3     0.3    0.4
Mexico                      0.3          0.5     0.7     0.8    0.6                        0.3         1.1     1.0     0.9     1.2
Paragusy                    0.7          0.7     0.9     0.9    1.0                       0.8          1.6     1.4     1.2    0.9
Peru                        2.0          2.7     3.5    4.2     3.0                       1.2          1.3     1.0     1.2    0.8
Uruguay                     0.9          0.7     0.7     1.4    1.1                       0.3          0.5     0.3     0.3    0.2
Venesuela                   0.6          0.2     0.3    0.5     0.9                       3.8          2.1     3.2     3.0    2.4
European Comwn Market      41.8         37.9    41.5    36.9   37.4                       28.3        23.7    24.7    23.6    24.8
Germany                     7.9          5.5     5.4     4.8    4.3                       11.7         9.6    10.2    10.9    10.8
Belgium                     4.0          3.5     4.2    4.4     3.6                       1.6          1.1     2.0     1.1    1.2
France                      4.1          2.9     3.6    3.3     3.5                       4.6          3.4     3.2     3.5    3.4
Italy                      13.8         16.4    15.6    14.4   15.4                       8.8          7.6     7.2     6.3    7.3
Luxemburg                   -                     -      -       --
Low Countries              12.0          9.6    12.7    9.9    10.6                       1.5          2.0     2.1     1.7    2.1
United African States       -                                      -         -                                          -      -
European Aes, of Free Coiwerce 18.0     11.7    11.9    9.6    11.8                      13.6         11.4    11.4    13.2   11.2
Austria                     0.1          0.1     0.1    0.1      -                        0.5          0.5     0.4     0.3    0.4
Denmark                     o.5          0.1     0.1    0.1      -                        0.3          0.2     0.2    0.3      -
Liechtenstein                -                -          -
Norway                      o.5          o.4     0.5    0.4     o.4                       0.3          0.4     0.4     0.9    0.7
Portugal                    0.2          0.3     0.4    0.1     0.2                       0.1          0.1     0.1     0.1     -
United Kingdom             15.2          9.6     9.5    7.7     9.9                       8.2          5.9     6.3     6.7    6.o
S-dau                       0.7          o.4     0.4    0.5     o.5                       2.2          2.7     2.2     2.2    2.0
Switserland                 0.7          0.8     0.9    0.7     0.8                       1.9          1.6     1.8     2.7    2.1
U.R.S.S.                    2.2          5.8     1.8    2.0     2.0                       0.8          1.8     0.7     0.4    o.6
United States               8.0          7.7     8.1   1l.5      8.2                      25.5        22.8    22.2    23.1   22.0
Others                     15.4         2.10    17.3   15.3    19.3                       16.6        17.8    17.8    16.2    18.7
Y Provisional.
Somrcet Ministry of Sconomt economic Report, 1968-1969.






Table 4.1: ARGENTINA - EXTERNAL PUBLIC DEBT OUTSTANDING AS OF DECEMEER 31, 1969 /1    2
Debt Repayable in Foreign Currency
(In thousands of U.S. doUars)
Page 1
Debt Outstanding
Decenber 31, 1969
SDisbursed  Including
only     undisbursed
TOTAL EXTERNAL PUBLIC DEBT                               1,788,241   2,323,495
Privately held debt                                    1,032,569   1,194,533
Publicly-issued bonds                                  156.017     1569017
Suppliers                                              5961471     74926
Austria                                                2t451       2,51
Belgium                                                3,469       4,374
Canada                                                 7,925      10,426
France                                                30,874      32,422
Germany                                               26,812      82,143
Italy /3                                             255,577     267,383
Japan                                                  8,213      11,380
Netherlands                                           12,384      21,916
Norway                                                    13          13
Spain                                                 62,361      67,10h
Sweden                                                   257       1,765
Switzerland                                           19,910      20,361
United Kingdom                                        23,219      25,044
United States                                        135,429     194,805
Others                                                 7,577       7,649
Financial institutions                                 1i8,643     127,782
Belgium                                                3,500       3,500
Canada                                                 2,500       2,500
Germany                                                7,787      16,926
Italy                                                  7,000       7,000
Japan                                                  2,500       2,500
Netherlands                                            1,727       1,727
Sweden                                                 1,933       1,933
Switzerland                                            L4,474      4,474
United Kingdom                                        10,171      10,171
United States                                         77,034      77,034
Others                                                    18          18
Privately placed bonds                                 161,438     161,1438
Loans from international organizations                   233,782     481,162
I BRD                                                  1514,243    336,O26
IDB                                                     79,539     1b5,136
Lnans From governments                                   1432,997    558,908
Canada                                                   2,281       2,970
Czechoslovakia                                              80          80
France                                                  17,138      17,138
Germany                                                102,012     1149,827
Hungary                                                    521         521
Italy                                                   16,080      16,080
Japan                                                    8,647       8,647
Netherlands                                                885         885
See footnotes at end of table.



Table l.l: ARGENTINA - EXTERNAL PUBLIC DEBT OUTSTANDING AS OF DECEMBER 31, 1969 /1  2
Debt Repayable in Foreign Currency
(In thousands of U.S. dollars)
__Page 2
Debt Outstanding
Source                                      December 31, 1969
Disbursed   Including
only     undisbursed
Loans from governments (cont.)
Poland                                                     83         279
Rumania                                                   650         650
Switzerland                                              1,593      1,593
United Kingdom                                           8,hoi       8,1XO
United States                                          265,457     342,596
U.S.S.R.                                                 6,999       7,061
Others                                                   2,169       2,169
Other                                                     88,892      B8,89'
Compensation for annuled oil contracts                  82754       82,651
Nationalization                                          6,238      6,238
/1 Debt with an original or extended maturity of over one year.
75 Includes the debt of SEGBA which Argentina considers private debt; also
includes private debt guaranteed by Banco de la Nacion, Banco Industrial
and Provincial Banks, insofar as it is known.
/3 Includes Saipem credit to Gas del Estado of $204,968,000.
Statistical Services Division
Economics Department
August 4, 1970



Table 4.2: ARGENTINA - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT
OUTSTANDING INCLUDING UNDISBURSED AS OF DECEMBER 31, 1969
Debt Repayable in Foreign Currency
(In thousands of U.S. dollars)       Page 1
DEBT   OUT ST
(BEGIN OF PERIOD) PAYMENTS OURING PERIOD
INCLUOING     AMORTI'
yEAR     UNDISBURSED     ZATION   INTEREST         TOTAL
TOTAL EXTERN,AL PURLIC DEaT
1910      2J319J661     346,486    113,960       460444
1971      1'973'175     279,596    113,790       393,386
1972      1,693,579     24*7033    105,374       3521406
1973      1,446,547     287,747     90,939       378.686
1974      10158,800     213,534     73#494       287,028
1975        945,266     152,651     61,566       214,217
1976        792P615     137,3t8     S1P993       189,310
1977        655,297     100,398     38,098       1380495
1978        554#900      79,302     31.S84       110.886
1979        475,598      63#102     26,714        89,817
1980        412,496      41,0828    23J372        65, 0o
1981        370,A68      37,359     ?0,438        57P797
1982        333,#309     37,468     18, 160       5S,627
1983        295.842      34.032     15.896        49,92A
1984        261#A1(      32P383     13,877        46,259
Note: Includes service on all debt listed in Table 4.1 prepared August 419 7
with the exception of the following, for which repayment terms are not
available:
Total                  $3 83hb000
Suppliers               23b,000
Privately placed bond   600,000
Loan from IDB
(revolving credit)  3,000,000



Table 4.2: ARGENTINA - ESTIMATED FU`URE SERVICE PAYIMETTS ON EXTERNAL PUJBLIC DEBT
OIJTSTANDING INCLIJDING UNDIfSBURSED AS OF DECEMiBEIR 31, 1969 (CONT.)
Debt Repayable in Foreign Currency
(In thousa&nds of U.S. dollTrs)     Page 2
DEBT OIITST
(BEGIN OF PERIOD)   PAYMENTS DURING PERIOD
INCLUDING     AMORTI.
YEAR    UNDISBURSEO     ZATIoN   INTEREST         TOTAL
PRIVATELY'tHELD OEWT
1970 r1193P699         218,466     719*438     289P904
1971       975P234     188,981     69,456      258,439
1972       786,253     155,548     60.830      216.379
19T3        630o704    211130     47.714       25P8.44
1974        419P574    142,405     32,T41       175t146
1975        277*169     79,389     249347       103P736
1976        197*780     76.790     18*685        95*4t5
1977        120*990     42,968      8,241        51.209
1978         78,022     30,939      4.933        35.872
1979         47,083     23* 145     2.812        25a958
1980         23*938      5*774      11'T86        7#560
1981         18,165      2,610      1D.040        3D650
1982         15S555      1,862       864          2.0746
1983         13,e693       915
1984         j2T774 A      60 0                   133A
PU HL1CL YISS'JED B!N IS
1970        156PO17      8,130t    100988        19,117
1971        147p888     11,199     ¶O0463        21,663
1972        136P689     14.2SP      9P?23        23i 917 
1973        122p442     43,022      6.7?30       51*752
1974         79,420     20s672      5.189        26,P6o
1975         58.548     10'72;      4311         14.833
1976         47PA26     1j0572      3#342        13.914
1977         37P254     10,P422     2d*582       13J004
1978         26,832     1,1.272     1B831        12*103
1979         16m560      7,982      1.089         9,071
19s0          fi57,           -       526           526
1981          8.576                   526           526
1982          8*578                   526           526
1983          8.578                   526           526
1984          8,578                   526           526



Table 4.2: ARtGENTINA - ESTIMAThED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT
OUTSTANDING INCLUDING UNDISBURSED AS OF DECEMBER 31, 1969 (CONT.)
Debt Repayable in Foreign Currency
(In thousands of U.S. dollars)      Page I
DEBT  OUTST
(BEGIN OF PERIOD) PAYMENTS DURING PERIOD
INCLUDING     AMORTI.
YEAR    UNDISSURSED     ZATION   INTEREST         TOTAL
PRIVATELY-HELD DEBT
SUPPLIERS
1970        749*962    128m084     4l*705       1697689
1971        620,978    *113.915   4*5314        159,230
1972       507*062     111.763     40.923       152.686
1973        395.299     99.033     32.309       131,341
1974        296,266     41.683     25#401       1or,oss
1975        214,583     67.569     19.f979      87.548
1976        147.013     65,120     15.167       80. 287
19T7         8 1894     31.812      5.565        37,376
1976         50*082     20.298      3.044        23.341
1979         29P784     14.794      1.686        16,48n
1960         14.991      5.404      1.244         6.649
1981          9.587      2#610        514         3.124
1982          6.977      1.862        358         2.220
1983          51iis        915        251         1#164
1984          4.200        600        210           810
FINANCIAL INSTlTUTIINS
1970        127.782     67.6o3      7.457        75,59
1971         60.180     49#717      3.339        53,056
1972         10.463      5.389        760         6.148
1973          5.074      1,926        368         2.293
1974          3.*84      1,327        218         1.545
1975          1.*821       729        135           864
1976          1.093        729         75           804
1977            364        3A4         15           r79



Table 4.2: ARGENTINA - ESTIMATED FUTURE SERVICE PA6Y-IET1S ON EXTERNAL PUBLIC DEBT
OUTSTANDING INCLUDING UJNDISBURSED AS OF DE&eMBER 31, 1969 (CONT.)
Debt Reparyable in F'oreign Currency
(Tn thousELndS of .S. do:ILars)     Page )
DEbT OOUTSI
(REGIN OF PERIOD)   PAYMENTS ('URING PERIOD
INCLUDING     AMUORTT
YEAR    UNDISBURS0:C     ZA'I I F. ITF:-isET     T2TAL.
PRV VAxTELY-'HE:LD LERr
PRItVATELY Pt,4CEO P', US,
1970        160(* 3jA    14 *65;)  Il1.2e,       25,93A
1971        146,l8ti     14#15u    10,341        24,491
1972        132#039     24.150      9.424        33.iS74
1973        107,889     67,150      6.3o7        73,457
1974         40.74o     36p523      1'933        40*456
1975          2.217         3I7       i22           492
1976          1                        i 848        A 7 t
1977          1,478        31y0        80           449
19 7a         I 909 g3790              3 8          428
1979            7 r 9       . r "I     37           407
1980            370         370        16           389
ILAANS F'R(OM .[WTV'!S RNATiONAI, OIHGAUI,f.ZAMIONS
1970        478.1 62    1 4 ,) )    5 959        29,959
1971        464,162      15$191    20k690        38,841
1972        446,011     Ž8i0,620   23*495        44J115
1973        425P391     24;,597    ?4,8!r7       49* 314
1974        4O,A884     25o.592    24,*897       50. 489
1975        375,p92     2             84 15  3   838  52,i292
1976        346.A87     27.0Ž9     22,081        49,11o
1977        319,85!     ?'t.452    7,0.335       47,786
i9r8        292,eaC6    23P479     li%610        42s*B9
j979        268p927     23.591     IT.084        40o675
1980        245.336     23P534     15,538        39.0)72
1981        221.pgo2    23,331     14,008        37,310
1982        198,5900    24276      1 2#46h       36P745
1983        174,224     24#231     jn#876        35#107
1984        149,993     Ž??.rQ6     9'333        32#22A



Table 4.2: ARGENTINA - ESTIMATED FUTURE SERVICE PAY!MENTS ON EXTERNAL PUBLIC DEBT
OUTSTANDING INCUJDING UNDISBURSED AS OF DECEMBER 31, 1969 (CONT.)
Debt Repayable in Foreign Currency
(In thousands of U.S. dollars)      Page 5
;i      T~ES    owlTsT
(RFGIN OF PERIOD) PAYMENTS OURING PERIOD
INCLUDING     A4ORTI'
YEAR    UNDISOURSED     ZATInN   INTEREST         TOTAL
LOANs FROM INTERNATIONAL ORGANIZATIONS
IBRD
1970        336.026      5.121     10*S54        15.675
1971        330.905      7#155     t3#362        20#51?
19?2        323.750      7,823     t5,?2         23.,550
1973        315P92?      9.886     07.509        2?*395
19?4        306.041     11.811     180561        30#372
1975        294.230     14.719     18.475        33.194
1976        279.511     15.650     1T.546        33.196
197?        263#A61     16.628     160556        33.186
1978        247.233     14.198     1'5#55        29#?55
r9?9        233.n35     15.l14     14.653        29.767
1980        217.921     16.061     13668?        29.748
1981        201.860     1?,096     12,663        29.759
1962        184.764     18.175    1l,571         29*746
1983        166.589     19.342     10.412        29.754
1984        147.247     20,578      9,.175       29.753
IDB
1970        1420136      8.879      5.405        14.284
1971        133#257     10.996      7.328        18.324
1972        122.261     12.797      7#768        20.565
1973        1090464     14.621      7.298        21.919
1974         94.943     137Rl      6.336        20.117
1975         81.062     13.666      5.413        19.099
1976         67.376     11,379      4.535        15.914
1977         55.0997    10.824      3,7T?        14,600
j976         45'173      9,281      3.053        12.334
9ro          35.*892     8.477      2,431        10.906
1980         27.415      7.4r3     t1851          9.S24
1981         19.942     6020S       1.346         70551
1982         13.736      6.101        898         6.999
1983          7,635      4,889        464         5,353
1984          2.746      2.318        158         20476



Table 4.2: ARGENTINA - ESTIMATED FUTURE SERVICE PAYMVENTS ON EXTERNAL PUBLIC DEBT
OUTSTANDING INCLUDING UNDISBURSED AS OF DECEMBER 31, 1969 (CONT.)
Debt Repayab:Le in Foreign Currency
(In thousands of U.S. dollars)      Page 6
DEHT  OuTST
(BEGIN OF PERIOD)   PAYMENTS DURING PERIOD
INCLUDING     AMURTId
yEAR     UNCISRURSED    ZATION   INTEREST         TOTAL
LOANS FROM GOVERNMENTS
197n        558,908     97,823     21#521       119,344
t971        461,o85     56,994     j9,597        76.191
1972        404,o91     55,862     t7*978        738*40
1973        348,229     41*264     16,244        57e508
1974        306,965     37,6,6     14,236        51,903
19T5        269,298     38,266     12p183        5O,44A
1976        231*n32     31,6o8     10,261        41,869
1977        1990424     28,oS6      8*662        36p7*4
1978        171,338     22,993      7#285        30*278
1979        148,345      14*474     6Pi68        20i642
1980        133,A71      10,628     5,503        16*131
1981        123P243      10,156     4P950        15P¶06
1982        113,n87     10,637      4*427        15*o6a
1983        102,449      8*195      3,908        12x103
i984         940255      8,195      3P517        11*712
CANIADA
1970          2,980         35d       134           492
1971          20622         29$,      120           416
1972          2P327         296       102           39A
1973          2*031         296        84           380
1974          1o735         296        66           36?
1975          1*439         296        49           345
1976          1*143         296        31           32r
1977            847         165         13          179
1978            682          17         8            26
1979            665         jT          8            2A
1980            648          17         a            25
1981            630          17         8            25
1982            613          17         8            25
1983            596          17         7            25
1984            578          t7         7            24



Table 4.2: ARGENTINA - ESTIMATED FUTURE SERVICIE PAYMENTS ON EXTERNAL PUBLIC DEBT
OUTSTANDING INCLUDING UNDISBURSED AS OF DECEMBER 31, 1969 (CONT.)
Debt Repayable in Foreign Currency
(In thousands of U.S. dollars)        Page 7
DEBT   OUTST
(BEGIN OF PERIOD) PAYMENTS nURING PERIOD
INCLUDING     A'IORTI.
YEAR     UNDISBURSED     ZATION   INTEREST          TOTAL
LOANS FROM GOVERNMENTS
C ZECHOSILVAKIA
1970              80          39          4            43
1911             41           20          2            22
1972              20          20          1            21
FRANCE
1970         17,138       ?D90U         874         8.7r7
1971          90.'38       3.802        462         4.264
1972          5#436       3.093         274         3.367
1973          2#343        1.390        119         1.509
1974            953          490         54           543
19T5            463          463         23           486



Table 4..2: ARGENTINA - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT
OUTSTANDING INCLUDING UNDISBURSED 4S OF DECEMBER 31, 1969 (CONT.)
Debt RepayabLe in Foreign Currency
(In thousands of U.S. dollars)      Page 8
DEBT  OUTST
(BEGIN OF PERIrO)   PAY4ENTS OURING PERIOD
INCLUDING    A,AORTIw
YEAR     UNDISBURSED    ZATION   INTEREST         TOTAL
LOANS F'ROM GOVERNMENTS
GERMANY
1970        149,827      16#714    5g647         22.361
1971        133,113      6,288      5,166         J454
1972        126.825      5.417      6#00?        11.423
1973        121,408      5#175      6,709        11,884
1974        116,233      5.175      6,487        11.662
1975        111,O58      5,175      6,176        11J351
1976        105#882     5175       5.865        11,041
1977        100707      5.175      5S5S5        100730
1976         95.532      5,175      5.244        10.420
1979         900357      5.175      40934        10.109
1980         85#182      5.175      4.623         9.799
19B1         80.006      5.175      4P313         9pa88
19e2         74.831      5P940      4OO2         9,943
1983         68nA91      6,75      3.640        10.346
1984         62,1t86     6.705      3.261         9.966
HU JNGARY
1970            521         In9        45           t54
1971            412        1n3         23           126
1972            309         1n3        17           12(
1973            ?06         1r13       11           114
1974            1O3        l13          5           100



Table 4..2: ARGENTINA - ESTIMATED FUTURE SERVICE PAYMENTS ON1 EXTERNAL PUBLIC DEBT
OUTSTAi1NDING INCLUDING UNDISBURSED AS OF DECEM1BER 31, 1969 (CONT.)
Debt Repayable in Foreign Currency
(In thousands of U.S. dollars)       Page 9
DEBT OUTST
(REGIN OF PERIOD)    PAYMENTS DURING PERIOD
.INCLUDING    AMORTI'
YEAR     UNDISBURSED     ZATION   INTEREEST        TOTAL
LOANS FROM GOVERN MENTS
I TALY
1970         16,080      19,087      1I138         9.945
191t          T'273       3*233        550         3,782
1972         4*,)41       4.041        258         4,098
JAPANI
197O          8,0647      4,047        416         4,463
1971          4.#600      29045        220         2.265
19?2          2.556       2.556         92         2.647



Table 4.2: ARGENTINA - ESTIMATED FU1'URE SERVICE PAYMENTS ON EXTERNAL PUBIJC DEBT
OUTSTANDING INCLUDING UNDISBURSED AS OF DECEMBER 31, 1969 (coNT..)
Debt Repayable in Foreign Currency
(In thousands of U.S. dollars)       Page 10
DEST   OI T sr
(BEGIN OF pER1OID) PAy,MENTS nUtING PERIOD
INCLUDING     AMGORTIO
YEAR     UNOISSBURSEO    ZATION   INTEREST          TOTAL
LOANS FROM GOVERNME2NTS
NETHERLANDS
1970            885          587         46           633
1971            298          131         iT           14A
1972             167         167          9           jT7
POLAND
1970             279          61         10            71
1971            21A           73         12            89
1972             145          73          8            81
1973              72          60          3            63
1974              12          12          a            13



Table 4.2: ARGENTINA - ESTM,ATED FU!UAJRE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT
OUTSI'ANDING INCLUDING UNDISBIURSIE AS OF DECEMBER 31, 1969 (CONT.)
Debt Repayable in Foreign Currency
(In thousands of U.S. dollars)       Page 11
DEBT   OUTST
(BEGIN OF PERIOD)    PAYMENTS DURING PERIOD
INCLUDING     AHURTI
YEAR     UNDISSURSED     ZATION   INTEREST         TOTAL
LOANS FROM GOVERNMENTS
RUMANIA
1970            650         558         32           590
1971             93          93          6            9P
SWITZERLAND
1970          1*593         682         73           955
1971            711         316         32           348
19T2            395         395         15           409



Table 4..2: ARGENTINA - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERMAL PUBLIC DEBT
OUTSTANDING INCLUDING UNDISBURSED AS OF DECEMBER 31, 1969 (CONT.)
Debt Repayable in Foreign Currency.
(In thousands of U.S. dollars)      Page 12
DEST  OUTST
C8EGIN OF PERIOD)   PAYMENTS OURIWG PERIOD
INC-LUOING    AnORT!.
YEAR    UNDISBURSED     ZATInN   INTERE$T         TOTAL
LOANS FROM GOVERNMENTS
UNITED KINGDOM
1970          8P401      5pO8s        510         5,594
i9Ti          3.316      i,4§9        193         1,691
1972          1A819      1#819         80         1.899
UNITED STATES
1970        342,o596    47.,474    12s419        590892
1971        295S122     36,078     127486        46*826
1972        259.044     36*943     .11t0o        48,053
1973        222,101     34.175      9.316        43,491
1974        187,926     31,588     7T624         39.21t
1975        1  .56,338  32.332      5.036        38,267
1976        124,007     26,137      4R365        30,501
1977         97P870     22,T76      3,093        25#*40
1978         75. 124    17,800      2.032        19,832
1979         57,324      9.281      1,226        1n0507
1980         48.042      5.436        a71         6,307
198l         42.607      4,964        629         5.593
1982         37.643      4.680        41T         5#097
1983         32.963      1.472        261         1.733
1984         31,490      1.472        249         1P721



Table 4.2: ARGENTINA - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT.
OUTSTANDING INCLUDING UNDISBURSED AS OF DECEMBER 31, 1969 (CONT.)
Debt Repayable in Foreign Currency
(In thousand8 of U.S. dollars)        Page 13
DEST     OuTST              --    
CBEGIN OF PERIOD) PAYMENTS DUAING PERIOD
INCLUDING     AMORTI
YEAR     UNDISBURSED      ZATION   INTEREST         TOTAL
LOANS FROM GOVERNMENTS
U.S.S.R.
19TO          7.061        3.749         60         3,809
1971          3.312        2#304         28         20332
j972           1.008         940          6            945
1973              69          65          1             66
1974               4           4          U              4
OTHERS
1970          2.169        1.455        113         1#568
1971             714         7j4         19           733



Table ..2: ARGENTINA - ESTIMATED FUTURE SERVICE PAYNENTS ON EXTERNAL PUBLIC DEBT
OUTSTANDING INCLUDING UNDISBURSED AS OF DECEMBER 31, 1969 (CONT.)
Debt Repayable in Foreign Currency
(In thousands of U.S. dollars)      Page 11
DEBT OUTST
COEGIN OF PERIOD) PAYMENTS DURXNG PERIOD
INCLUDING     A4ORTI,D
YEAR     UNDISBURSED     ZATION  INTEREST         TOTAL
COMPENSATION FOR AOULD OIL CONTRACTS AND NATIONALIZATION
1970        $88892       16°197     5.042        21,239
1971         72#695      15470     4.045        19#516
1972         57*224      15*003      30070       18o073
1973         42J222      10.846      2.173       130019
1974         3I.376       7,869      1.620        9,469
1975         23.5O7       6P591      1,149         7.740
1976         16.916       10891        965        2,856
1977         15.025       1.892        860        2#752
1978         13.133       1.891        755        2.646
1979         11.242       1,892        650        2.542
1980          9.350       1.892        545         20437
1981          7.458       1.291        440         1.731
1982          6.167         692        380         1*072
1983          5#475         691        335         1.026
1964          4.784         692        291           963
Statistical Services Division
Economics Department
August 4, 1970



Table 4.3:  EXTERNAL DEBT SERVICEA/1964-70 AND PROJECTIONS, 1971-80
(US$ million)
Year    Amortization    Interest     Debt Service    Expot         Debt Service
Ratio (%
1964        299            82            381          1,554           24.5
1965        258            81            339          1,684           20.1
1966        353           102            455          1,784           25.5
1967        354           102            456          1,687           27.0
1968        370           113            483          1,741           27.7
1969        376           111            487          1,999           24.4
1970        347           114            461          2,192           21.0
1971        289           129            418          2,245           18.6
1972        267           128            395          2,398           16.5
1973        346           140           486           2,532           19.2
1974        321           154            475          2,679           17.7
1975        312           171            483          2,837           17.0
1976        352           188            540          3,007           18.0
1977        376           202            578          3,169           18.2
1978        427           221            648          3,341           19.4
1979        466           240            706          3,521           20.1
1980        510           260            770          3,711           20.8
j__On public and publically guaranteed loans of one year or more.
U/ Goods and non-facto'r services.
Source: IBRD staff.






Table 5.1: PUBLIC SECTOR RESOURCES FOR INVESTMENT - 1966-1971
(in millions posos)
1966    1967    1968     19691/  1970    1971-3
I. SOURCES
A.  Current Account Surplus                772    3343     4508    4227    6027    6475
1.  Central Government                   385    1973     2054    2124    3090    3427
Central Administration               222    1289    1482    1793     1995    2739
Special Accounts                      88     136     278       70     405     117
Decentralized Agencies               -82    -230     -55      237     466     356
Energy Fund                          143     256     309      376     317     308
Social Security                      1I      521      40     -352     -93     -93
2. State Enterprises                      49     546    1064    1160     13]0    1651
State Enterprises                   -152     283     641      718     839     949
SEGBA, SOMISA, HIDRONOR              201     263     423     442      471     702
3. Provincial Governments4/              338     821    1389      943    1627    1397
B.  Capital Account Revenues               182     383      308     535     314     585
C.  Borrowing                             25149   2213    1666     2548    3515    5114
1.  Internal (net)                      1958    1055     894     1459    1972-/ 3119
2.  External (gross)                     591    1158     772     10d9    1513    1995
Total                            3503    5938    6482    7310     9886   12182
II.  USES
A. Gross Fixed Investment                 2420    3771     4551    5818    8012Y  10543
1.  Central Government                   486    1109    1502     1887    2379    3057
Central Administration                78     329     396     474      653     966
Special Accounts                      4L      85     119      165     418     398
Decentralized Agencies               330     659     944    1225     1281    1653
Energy Fund                           33      37      43       24      27      40
2.  State Enterprises                   1198    1637    1776     2232    3267    5106
State Enterprises                    991    1339    1510    171h     2627    3700
SEGBA, SOMISA, HIDRONOR              207     298     266      488     640    1406
4/
3.  Provincial Governments.              736    1025    1273     1699    2367    2381
B.  Amortization of External Debt          568     919    1091     1177    1357    1146
C.  Financial Investment                   516    1249     839      31h     517    1485
Total                           3503    5938    6482    7310     9886   12V12
/ Preliminary.
/ Revised budget estimates.
j Budget estimates and preliminary estimatesfor rest of public sector by Secretariat of
Finances.
4/ Includes the municipality of Buenos Aires.
v   Since banking system finance to the public sector was around $a 900 million, it would
appear that internal borrowing and investment are overestimated by up to $a 1.1 billion.
Source: Ministry of Economy and Labor; Central Bank.



Table 5.2;: PUJLIC SECTOR RESOURCES FOR DNES17TENT     19606-1971
(percentage distribution)
1966     1967      1968     1969-     1970     1971
I. SOURCES
A. Current Account Surplus            22.0     56.3     69.5      57.8     61.6      53.2
1.  Central Government           11.0      33.2     31.7     29.1      31.6     28.1
Central Administration.      73     21.7      22.9 24.5                   22.5
Special Accounts            2.5       2.3      4.,3     1.0       4.1      1.0
Decentralized Agencies     -2.3     -3.9      -o.8      3.2       4.8      2.9
Energy Fund                 4.1       4.3      4.8      5.1       3.2      2.5
Social Security             0.4       8.8      o.6     -4.8      -1.0     -o.8
2.  State Enterprises              1.4      9.2     16.4      15.9     1.        13.6
State Enterprises          -4.3       4.8      9.9      98                 7 
SEGBA, SAMISA, HIDRONCOI    5.7       4.4      6.5       .o        . 8     5 8
3.  Provincial Governments        9.6      13.9     20.4      12.9     16.6     11-5
B.  Capital Account Revenues           5.2      6.4      h.8       7.3      3-5       4.8
C.  Borrowing                         72.8     37.3     25.7      3!.9    35.9      42.0
1.  Internal (net)               55.9      17.8    `138       20.0     20.1      25.6
2.  External (grcss)              16.   9 19.5   -1.9         1.9      15 8      164.
Total Ri3sources      100.0     100.0     000C0   100.0     100~     lOG O
_. ~                  = _=      _e
II. USES
A. Gross Fixed Tnve       E.-.ent     69.1     63.5      70.2     79.6      8] 8     86.5
1.  CentPt Gcverj,,ient           13.9     18.7     23.2      25.8     21.3      25.1
Cen.cral Ami:istration      2.2       5.5      6.1      6.5       6.7       7.9
Special Ac.,.c-l-.s         1.3       1.4      1.8       2.3      L.3       3-3
Decentrralizaei Agencies    9,4      11.1     14.6     -6.8      13.1      13.6
Energy P,m d                0.9       o.6      0.7      0.3       0.3       0.3
2. State Enterpri.seus            34.2     27.6     27.4      30.5      34       4.9
State Emterprises          2    /5 23.3                23.9      26.8      30U.
SEGBA, SOMISA, HIDRONOR     5.9       5.0      4.1       6.7      6.5      la.5
3.  Provincial Governments       21.0      17.3     19,6      23.2     24.2      l9.5
B.  Amortization of External Debt     16.2     150'     16.8      16.1      13.9     9c4
C.  Financial Investment              14.7     21.0     12.9       4.3       5-3      4.0
Total Uses           100.0     100.0    100.0     100.0    100.0    100.0
Source and notes:   See Table 1 of this Annex.



Table 5.3: PJBLIC SECTOR RESOURCES FOR INVESTMENT - 1966-1971
(Percentage - year to year change)
66/67    67/68   68/69    69/70    70/71
I. SOURCES
A.  Current Account Surplus                 333.0    34.8     -6.2     42.6      7.4
1.  Central Goverrnment                  412.5     4.1      3.4     45.4     10.9
Central Administration               480.6    15.0     21.0     11.3     37-3
Special Accounts                      54.5   104.4    -74.8    478.6    -71.1
Decentralized Agencies              -180.5    76.1    430.9     96.6    -23.6
Energy Fund                           79.0     20.7    21.7     84.3    - 2.8
Social Security                     3621.4    -92.3  -980.0     73.3      1.1
2. State Enterprises                    1014.3    94.9      9.0     12.9     26.0
State Enterprises                    186.2   126.5     12.0     16.9     13.1
SEGBA, SOMISA, HIDRONOR               30.8    60.8      h.5      6.6     49.o
3. Provincial Governments                143.8    68.5    -32.1     72.5    -14.1
B.  Capital Account Revenues               110.4    -19.6     73.7     64.3    70.1
C.  Borrowing                               -13.2   -24.7     52.9     38.0 o  45-5
1.  Internal (net)                       -46.1   -15.3     63.2     35.2     58.2
2. External (gross)                       95.9   -33.3     41.1     41.7    29.3
Total Resources                   69.5     9.2     12.8     3        24.4
II. USES
A. Gross Fixed Investment                    55.8    20.7     27.8     37.7     31.6
1. Central Government                    128.1    35.4     25.6     26.1     28.5
Central Administration               321.8    20.4     19.7     37.8     47.9
Special Accounts                      93.2     40.0    38.7    153.3    -4.8
Decentralized Agencies                99.7    43.2     29.8      4.6     29.0
Energy Fund                           12.1    16.2    -42.9     12.5     48.1
2. State Enterprises                      36.6     8.5     25.7     46.4    56-3
State Enterprises                     35.1    12.8     15.5     50.6     40.8
SEGBA, SOMISA, HIDRONOR               44.o   -10.7     83.5     31.1    119.7
3. Provincial Governments                39.3     24.2     33.5    39-3      o.6
B. Amortization of External Debt            61.8     11.9      7.9    15.3    -15.6
C.  Financial Investment                   142.1    -32.8    -62.6    64.6     -6.2
Total Uses                        69.5      9.2    12.8     33.9     24.4
Source and notes: Table 1 of this annex.



Table 5.4:  PUBLIC SECTOR RESOIJRCES FOR INVESTMENT - 1966-1971
(Percent of GNP)
1966     1967     1968    19691/   1970     1971
I. SOURCES
A. Current Account Surplus          1.9      6.4      7.4      6.1     7-3      6.5
1. Central Government           1.0      3.8      3.4      3.1     3.7      3.14
Central Administration    0.7      7;F 2              h       M
Special Accounts          0.2      0.3      0.5      0.1     05      0.1
Decentralized Agencies   -0.2     -0.4     -0.1      0.3     o.6      0.4
Energy Fund               0.4      0.5      0.$      0.5      0.4     0.3
Social Security            -       1.0      0.1     -0.5     -0.1    -0.1
2. State Enterprises            0.1      1.1      1.7      1.7     1.6      1.7
State Enterprises         -5;T.             1 1 .    1.0      1.O     1.0
SEGBA, SOMISA, HIDRONOR   0.5      0.5      0.7      o.6      O.6      0.7
3. Provincial Governments       0.8      1.6      2.3      1.3     2.0      1.4
B. Capital Account Revenues         06       0.7      0.5      0.8     0.14     o.6
C. Borrowing                        6.3      4.3      2.7      3.7     4-3      5.1
1. Internal (net)               4.8      2.0      1.4      2.1      2.4     3.1
2. External (gross)             1.5      2.2      1.3      1.6      1.9      2.0
Total Resources        8.7    11.4     10.6     10.5     11.9     12.3
=             =
II. USES
A. Gross Fixed Investment           6.0      7.3      7.5      8.4      L.      iO.6
1. Central Government           1.2      2.1      2.5      2.7      2.9      3.1
Central Administration    0.2               0.7      0.7               1.0
Special Accounts          0.1      0.2      0.2      0.2      0.5      0.4
Decentralized Agencies    0.8      1.3      1.6      1.8      1.6      1.7
Energy Fund               0.1      0.1      0.1       -        -        -
2. State Enterprises            3.0      3.2      2.9      3.2      4.0     5.1
State Enterprises                                             3. 7  2 7  3-2  3.7
SEGBA, SOMISA, HIDRONOR    0.5     o.6      0.4      0.7      0.8      1.14
3. Provincial Governments       1.8      2.0      2.1      2.5      2.9     2-4
B. Amortization of External Debt    1.4      1.8      1.8      1.7      1.6     1.2
C. Financial Investment             1.3      2.4      1.4      05      o.6       .5
Total Uses             8.7    11.4     10.6     10.5     U. 9
Source and notes: See Table 1 of this Annex.



Table 5.5: ANALYSIS OF PUBLIC SECDLOR FINANCES, 1966-71
(in millions pesos)
1966    1967     1968     19691/    1970=/   1971/
CENTRAL1 GOVERNMENT
Current revenues                                       6,261    9,946   10,971   12,253   14,914   17,932
Current expenditures                                   5,876    7,973    8,916   10,129   11,824   14,505
Current account surplus                                  385    1,973    2,054    2,124    3,090    3,427
Savings ratio                                           .061     .198     .187     .173     .207      .191
Investmentk/                                             487    1,109    1,502    1,887    2,379    3,057
Savings as % of investment                              79.1    177.9    136.8    112.6    129.9    112.1
STATE ENTERPRISES
Current revenues                                       2,871    4,026    4,764    5,275    6,185     7,334
Current expenditures                                   3,023    3,743    4,123    4,557    5,346    6,385
Current account surplus                                 -152      283      641      718      839      949
Savings ratio                                          -.053     .070     .135     .136      .136     .129
Investment4/                                             991    1,339    1,510    1,744    2,627    3,700
Savings as % of investment                               -       21.1     42.5     41.2     31.9     25.6
Surplus of other state enterpriseas/                     201      263      423      442      471       702
Investment-2&                                            207      298      266      488      640    1,406
Savings as % of investment                              97.1     88.2    159.0     90.6     73.6     49.9
PROVINCIAL GOVERN6ENTS-/
Current revenues                                       2,648    3,624    4,563    4,856    6,314    6,989
Current expenditures                                   2,310    2,800    3,174    3,913    4,687    5,593
Current account surplus                                  338      824    1,389      943    1,627    1,397
Savings ratio                                           .128     .227     .304     .194     .258      .200
Investment24/                                            736    1,025    1,273    1,699    2,367     2,381
Savings as % of investment                              45.9     80.4    109.1     55.5     68.7     58.7
PUBLIC SECTOR
Total savings                                            772    3,343    4,508    4,227    6,027    6,475
Total revenues7/                                      11,780   17,596   20,298   22,384   27,413   32,255
Savings ratio                                           .066     .190     .222     .189     .220      .201
Gross fixed investment!/                               2,420    3,771    4,551    5,818    8,012L1/10,543
Savings as % of investment                              31.9     88.7     99.1     72.6     75.2     61.4
Savings as % of GNP                                      1.9      6.4      7.4      6.1      7.3      6.5
Capital revenues                                         182      383      308      535      344      585
Financial investment                                     516    1,249      839      314      517      485
Funds available for fixed investment                     438    2,477    3,977    4,448    5,854    6,575
Funds available as % of fixed investment                18.1     65.7     87.3     76.4     73.1     62.4
Financing gap before borrowing                         1,981    1,294      575    1,371    2,158    3,968
Gross external borrowing_/                               591    1,158      772    1,089    1,543    1,995
Amortization8/                                           568      919    1,091    1,177    1,357     1,146
Net external borrowing                                    23      239     -319      -88      186       849
Net internal borrowing_/                               1,598    1,055      894    1,459    1,97,10/ 3,119
Central Bank                                             989      642      347      338      502       740
Others (net)                                             969      413      547    1,121    1,470    2,379
Gross domestic investment                              7,426   10,066   12,487   15,681   19,o48    21,252
Gross domestic savings                                 8,263   11,039   12,917   15,X71   18,982    21,096
Resource balance (- , inflow)                            837      973      430    - 210     - 66     - 156
Factor income payments                                   313      670      717      774      801    1,016
Balance in current account                               524      303     -287     -984     -870   -1,172
Net public inflow                                         23      239     -319      -88      186      849
Net private inflow                                      -547     -542      606    1,072      684      323
1/  Preliminary.
2/  Budget estimates, 1971; revised budget estimates, 1970.
3/ Includes Central Administration, Decentralized Agencies, Special Accounts, Social Security and Energy Fund.
/   Excluding financial investment.
SEGBA, SOMISA, HIDRONOR.
Z/ Includes the municipality of Buenos Aires.
7/ Not including SEaBA, SOMISA, HIDRONOR.
s/ From balance of payments.
9/ Residual.
10/ Since banking system financing to the public sector was around $a 900 million, it would appear that internal
borrowing and investment are overestimated by up to $a 1.1 billion.
Sources: Ministry of Economy and Labor; Central Bank.



Table 5.6: ANALYSIS OF PUBLIC SECTOR FINANCES, 1966-71
(Percent of GNP)
1966   1967   1968  1969   1970   1971
Central Government
Current revenues                          15.5   19.2   18.0  17.7   18.1   18.1
Current expenditures                      14.6   15.4   14.6  14.6   14.3   14.6
Current account surplus                    1.0    3.8    3.4   3-1    3-7    3.5
Investment                                 1.2    2.1    2.5   2.7    2.9    3.1
State Enterprises
Current revenues                           7.1    7.8    7.8   7.6    7.5    7.4
Current expenditures                       7.5    7.2    6.8   6.6    6.5    6.4
Current acco nt surplusi/                  0.1    1.1    1.7   1.7    1.6    1.7
Investment 1                               3.0    3.2    2.9   3.2    4.0    5.1
Provincial Governments
Current revenues                           6.6    7.0    7.5   7.0    7.6    7.0
Current expenditures                       5.7    5.4    5.2   5.6    5.7    5.6
Current account surplus                    o.8    1.6    2.3   1.4    2.0    1.4
Investment                                 1.8    2.0    2.1   2.4    2.9    2.4
Public Sector
Current revenues                          29.2   33.9   33.3  32-3   33.2   32.5
Current expenditures                      27.3   27.5   25.9  26.2   25.9   26.0
Current account surplus                    1.9    6.4    7.4   6.1    7.3    6.5
Gross fixed investment                     6.0    7.3    7-5   8.4    9.7   10.6
Capital revenues                           0.4    0.7    0.5   0.8    0.4    0.9
Financial investment                       1.3    2.4    1.4   0.4    o.6    0-5
Funds available for fixed investment       1.1    4.8    6.5   6.4    7.1    6.6
Financing gap before borrowing             4.9    2.5    0.9   2.0    2.6    4.0
Gross external borrowing                   1.5    2.2    1.3   1.6    1.9    2.0
Amortization                               1.4    1.8    1.8   1.7    1.6    1.2
Net external borrowing                     0.1    0.5   -0.5  -0.1    0.2    0.9
Net internal borrowing                     4.0    2.0    1.5   2.1    2.4    3.1
Resource balance (- - inflow)              2.1    1.9    0.7  -0.3   -0.1   -0.2
Faotor income payments                     0.8    1.3    1.2   1.1    1.0    1.0
Balance in current account                 1.3    0.6   -0.5  -1.4   -1.0   -1.2
Net public inflow                          0.1    0.5   -0.5  -0.1    0.2    0.9
Net private inflow                        -1.4   -1.0    1.0   1.5    0.8    0.3
1/ Including other State Enterprises.
Source: Table 5.5.



Table 5.7:  CENTRAL ADMINISTRATION OPERATIONS, 1966-71
(in millions pesos)
1966      1967      1968      19695/     1970/      1971
Current Revenues                    2 924.6   4 793.3   5 217.3   6,015.8    6,782.0    8,559.2
Taxation                          2!504.B   4,276.3   4,570.6
Non-Tax Revenues                    339.8     517.0     646.7
Current Fxpenditures                2,702.7   3,504.0   3 735.6   4222.4    .4,786.6    5,820.3
Wages and salaries                1,651.5   2,090.0   2;282.0
Goods and Services                  387.8     518.1     551.5
Interest on Public Dsbt             246.4     302.1     308.8
Transfers to Private Sector         367.6     463.6     505.6
Other Expenditures                   49.4     122.2      87.7
Emergency Expenditure                 -         -         -
Unspecified Economies                 -         --
Savings                               221.9   1,289.3   1,481.7   1,793.4    1,995.4    2,738.9
Investment Expenditure                 78.4     328.6     395.5     473.5      653.3      966.3
Equipment                           722        70.2      65aN
Public Works                         50.2     258.4     330.3
Surplus/Deficit                       143.5     860.7   1,086.2   1,319.9     1,342.1    1,772.6
1/ Breakdown not available.
2/ Revised budget estimate, breakdown not available.
3/ Budget; breakdown not available.
Source: Ministry of Economy and Labor.



Table 5.8i OPERATIONS OF THE SPECIAL ACCOUNTS, 1966-71
(in millions pesos)
1966     1967    1968     19691/   1970-/  19713/
Current Revenues                      290.3   430.5    561.7    450.8   1,070.6   809.0
Tax Revenues
Non Tax Revenues                       -        -       -
Current Expenditures                  202.8   294.8    283.3    380.8     665.5   691.6
Wages and Salaries                  1064     146.9   136.3                -
Goods and Services                   89.5    107.8   135.2       _
Other                                 4.9    40.1     11.8       -
Savings                                87.5    135.7   278.4     70.0     405.1    117.4
Investment Expenditure                 44.4     84.5   119.3    165.2     417.5    397.5
Equipment                            20.7     72.6    39.3       -
Public Works                         23.7     51.9    80.0       -
Surplus/Deficit                        43.1     51.2   159.1     95.2     -12.4   -280.1
1/ Breakdown is not available.
2/ Revised budget estimate; breakdown not available.
3/ Budget; breakdown not available.
Source: Ministry of Economy and Labor.



Table 5.9: OPERATIONS OF THE DECENTRALIZED AGENCIES, 1966-1971
(in millions pesos)
1966      1967     1968      19691/    1970-/     19713/
Revenues                          1,o81.6   1,249.6   1,465.3  2,048.7   2,753.7   2,815.0
Current Expenditures              1,163.6   1,479.2  1,520.0   1,812.0   2,287.5    2,459.-
Wages and Salaries                875.3   1,095.0   1,135.2
Goods and Services                267.8     321.1     347.3
Transfers to the Private
Sector                           15.9      52.2     37.5
Other                               4.6      10.9      -
Savings                             -82.0    -229.6    -54.7     236.7     466.2      355.6
Investment Expenditures             330.4    658.6     943.9   1,224.6   1,280.9    1,652.7
Equipment                          80.1     185.1    184.7
Public Works                      250.2    473.4     759.2
Other Investment                    0.1       0.1      -
Surplus/Deficit                    -412.4    -888.2   -998.6    -987.9    -814.7   -1,297.1
l/ Breakdown is not available.
/ Revised budget estimates; breakdown not available.
3/ Budget; breakdown not available.
Source: Ministry of Economy and Labor.



Table 5.10: OPERATIONS OF THE NATIONAL ENERGY FUND, 1966-71
(in mi:Llions pesos)
196l97 6/  *2/    3/
1966      1967     1968     1969-    1970-     1971-
Revenues                                  148.o     268.0    323.0     391.6    324.0     328.0
Taxation                               T1   7 F   26     6     .    o 295.O     -        -
Other Revenues                            -         -       57.0      96.6      -        -
Current Expenditures
Administrative and miscellaneous          5.o      12.0     14.0      16.0       6.8     20.0
Savings                                    l43.0    256.0    309.0     375.6     317.2    308.0
Investment Expenditures
Rural Electrification                    33.0      37.0     43.0      2h.0      27.2      40.0
Surplus                                   110.0     219.0    266.0     351.6     290.0     268.0
l/ Breakdown not available.
2/ Revised budget estimates; breakdown not available.
3/ Budget; breakdown not available.
Source: Ministry of Economy and Labor - Budget Bureau.



Table 5.11: OPERATIONS OF THE SOCIAL SECURITY SYSTEM
(in millions pesos)
1/        2/
1966     1967    1968     1969     1970     1971-
Revenues                               1,823.9  3,2o4.5  3,403.4  3,346.1  3,983.7  5,421.2
Contributions and Taxes Paid
in Cash:-                            1,699.6  2,919.5  3,117.0  3§387.3 4,09.0
Fund for private sector employees  1,127.9  1,907.0  2,017.9  2,1103     -
Fund for public sector employees     529.8    578.4   688.3    819.8     -
Fund for self-employed                41.9    434.1   410.8    427.2     -
Payments in Treasury Bills:-
Fund for public sector employees       -      200.0   253.4      -
Other Receipts3"                       124.3     85.o    33.0    -41.2
Expenditures                           1,809.9  2 683.2  3,363.4 3,698.1  4o77.3    5,514.0
Benefits Paid:-                      1,773.   2,633.1  3,310.9          3,9b.1 .980
Fund for private sector employees  1,097.2 1,43 .3  1,933.3  1,898.0     -
Fund for public sector employees     639.O 1,143.3  1,243.8  1,603.6     -
Fund for self-employed                36.8     54.5   133.8    153.5     -
Administrative Costs4/                  36.9     50.1    52.5     43.0    100.0
Savings                                   14.o   521.0     40.0   -352.0    -93.6     -92.8
1/ Revised budget estimate; breakdown not available.
7/ Budget; breakdown not available.
7 Net of miscellaneous payments.
1/ Includes administrative costs of the National Social
Security Institute.
Source: Ministry of Economy and Labor, Social Security Secretariat.



Table 5.12: OPERATIONS OF THE STATE ENTERPRISES., 1967-1971
CLASSIFIED ACCORDING TO FUNCTION
(in millions pesos)
Transport
and
Energy    Communi-
Sector    cations    Others    Total
1967
Receipts                        2,381.1     1,555.0     89.6   4,025.7
Expenditure                     1,742.4     1,904.2      96.3   3,742.9
Surplus(+)/Deficit(-)            +638.7      -349.2      -6.7    +282.8
Investment Expenditure            988.9      347.7       2.8    1,339.3
1968
Receipts                        2,820.5     1,835.2     108.5   4,764.1
Expenditure                     2,097.0     1,928.7      97.1   4,122.7
Surplus(+)/Deficit(-)            +723.5       -93.5     +11 4    +64114
Investment Expenditure          1,005.0      503.0        2.5   1,510.4
1969
Receipts                        3,101.5    2,003.1      170.4   5,274.9
Expenditure                     2,247.1     2,v164.6    145.1  41,556.7
Surplus(+)/Deficit(-)            +85414      -161.5     +25.3    +718.2
Investment Fxpenditure          1,107.8       632.8       3.8   1,744.5
1970 /
Receipts                                                        6,185.4
Expenditure                                                     5,346.4
Surplus (+)/Deficit(-)                                          + 839.0
Investment Expenditure                                          2,626.7
1971- ( Budget)
Receipts                                                        7,333.9
Expenditure                                                     6,384.5
Surplus (+)/Deficit (-)                                         + 949.4
Investment Expenditure                                          3,700.1
l/ Revised budget estimate; breakdown not available.
2/ Breakdown not available.
Source: Table 12 of this Arnnex.



Table 5.13: OPERATIONS OF TrRE STATE ENTERPRISES, 1967-71
(in millions pesos)
State
State                        Mechi-
State               Water   State                       Buenos   State   Inland             State    Tale-                        nical
Petro-    State      and    Coal-               State   Aires   Merchant Water-             Ship-   commun-                       Indus-   Naval
leum       Gas    Energy    fields    Sub-     Rail-    Subway  Marine    way     Port     yards   ications Argentine    Sub-    tries    Docks    Sub-    Grand
(YPF)     Corp.     Corp.   (YCF)     Total     roads   System   (ELMA)  FIleet  Authority  (TARENA) (ENTEL)  Airlines   Total    (IME)   (AFNE) Total      Total
1967
Receipta                1,576.1    468.3     315.0    21.7    2,381.1     697.5   25.2   188.4     45.4     68.6      10.8    379.5     139.6   1,555.0     52.9    36.8    89. 6   4,025.7
Expenditure             1,119.7    375.1     200.7    46.9    1,742.4   1,135.0   29.3    192.0    66.6     50.7       9.5    250.4     170.9    1,904.2    59.8     36.5   96.3    3,742.9
Surplus(+)/Deficit(-)    +456.5    +93.2    +114.3   -25.2     +638.7   -437.5    -4.1    -3.6    -21.2    +17.9      +1.3   +129.2     -31.3    -349.2     -6.9     +0.3   -6.7      282.8
Investment Expenditure    518.9    284.0     165.5    20.5      988.9    1l9.5     4.5    10.8      1.5     11.7       1.3   126.6       42.0     347.7       -      2.8     2.8   1,339.3
1968
Receipta                1,939.6    505.8     350.8    24.3    2,820.5     796.8   30.1    211.0    55.2     63.9      11.8    475.3     190.9    1,835.2    70.3    38.1   108.5    4,764.1
Erpenditure             1,373.6    462.9     212.4    48.1    2,097.0   1,110.0   30.5    203.6    65.7     50.1      12.0    253.4     203.3    1,928.7    62.7    34.4    97.1    4,122.7
Surplus(+)/Deficit(-)    +565.9    +42.8    -138.4   -23.8     *723.5    -313.2   -0.4     +7.4   -10.4    +13.8      -0.2   +221.9     -12.4     -93.5     +7.7     +3.7  *11.4      641.4
Investment Expenditure    616.3    130.7     243.6    14.3    1,005.0    338.0    17.5    18.6      1.8     7.0        1.4   112.7        5.9     503.0      0.3     2.2     2.5   1,510.4
1969
Receipts                2,14l.4    547.0     387.2    25.9    3,101.5     833.0   30.5    220.7    62.3     72.2      10.5    528.7     245.2    2,003.1   123.6    46.8   170.4    5,274.8
Expenditure             1,483.5    457.5     250.2    55.,    2,2L-L. l  ,293.1   32.0    217.9    72.2     52.5      10.7    333.4     252.6    2,164.6   103.2    41.9   145.1    4,556.7
SurpluB(+)/Deficit(-)    +657.8    +89.5    +137.0   -30.0     +854.4    -360.1   -1.5     +2.8    -9.9    +19.7      -0.2   *195.2      -7.4     -161.5   +20.5    +4.9   '25.3     718.2
Investment Expenditure    678.9    156.9     263.8     8.1    1,107.8    335.0     6.0    25.9      0.3    13.3        2.9   246.0        3.6     632.8      0.6     3.2     3.8   1,744.5
9701/
Receipta                                                                                                                                                                            6,185.4
Expenditure                                                                                                                                                                         5,346.AL
Surplu (+)/Deficit(-)                                                                                                                                                                 839.0
Investment Expenditure                                                                                                                                                              2,626.7
19712/ kset)
Receipts
Expenditure                                                                                                                                                                         7-333.9
Surplus (+)/Deficit (-)                                                                                                                                                            6,384-5
Investment Expenditure                                                                                                                                                               949.4
3,700.1
l/ Estimated; breakdown not available.
7/ Breakdown not available.
Source: Ministry of Economy and Labour, Budget Bureau.
Ministry of Public Works.
Enterprise accounts.



Table 5-.1:  OPERATIONS OF THE PROVINCIAL GOVERNMTS AND
THE MUNICIPALITY OF BUENOS AIRES
(in millions pesos)
1966     1967      19681/   1969L/   1970/      19713/
Revenues                                  2,648     3 624    4,563    4 856     6,313. i  6,989.0
Taxation                                  991     a2 ,              T52,4
Non Tax Revenues                          289       407      560      305
Share in National Revenues              1,368     1,770    2,151    2,408
Current Expenditures                      2 310     2 800    3 174    3 913-    b.687.1   5,592.5
Wages and Salaries                                                  2 2,31
Goods and Services                        291       393      473      494
Interest on Debt                           69        66       26       36
Transfers to Private Sector               229       269      300      516
Other                                       26       23       60       49
Current Savings                              338      824    1,389      943     1,626.6    1,396.5
Investment Expenditures                      736    1,o25    1,273        9V    2,367.1    2,380.8
Equipment                                  7        122      179      202        302
Public Works                              600       903    1,o94     1,497    2,o65
Surplus/Deficit                             -397     -201     +116      -755      -740.5    -984.3
1/ Data for some provinces is preliminary.
2/ Revised budget estimates; breakdown not available.
3/ Budget; breakdown not available.
IT Expenditure data for municipality of Buenos Aires is preliminary.
Source:  Ministry of Economy and Labor - Budget Bureau.



Table 5-l5:  PUBLIC SECTOR TRANSFERS
(in millions pesos)
1966      1967      1 968     1969    9g7-I     1971
From: Central Administration           1,353.7   1,796.0   2243.2    2,1)49.6  2 366-6  2 794-3
To: Special Accounts                    133       39.1                90.3      5. 9
Decentralized Agencies            326.2     797.5     987.9     854.2    674.5   1,030.2
State Enterprises                 947.3     911 .4    945.9     752.14   662.9     957.8
Other State Enterprises-           60.0       -         -         -       50° 
Provincial Governmrents             6.7      48.0     276.9     452.7    383.3     721.3
From: Decentralized Agencies              19.1      13.9       9.5      11.6     10.0      87.5
To:  Provincial Governments             19.1      13.9       9.5      11.6
Central Administration              -                        -             -         -
Special Accounts                    -         -         -                 10.0      87-5
From: Special Accounts                     -         o.8      40.9       7.5     -          -
To: Provincial Governments               -          7       70o.9      77
Decentralized Agencies              -         -         -         -
From: Energy Fund Accounts               113.0     144.6     240.2     291.1    255.5     289.2
To: State Enterprises       3/          13.0     144.6      123.2    194.5    22
Other State Enterprises-            -         -       117.0      96.6
l/ Revised budget estimates.
2/ BlAget; breakdown not available.
3/ Segba, Somisa, Hiidronor
Source: Ministry of Economy and Labour; Budget Bureau.



Table 5.16:   NATIONAL GOVERNlMENT REVENUES, 1961-1971
(in millions pesos)
1961     1962     1963    1964     1965     1966      1967     1968      1%69      1970 1/   1971 2/
1.  Centr&l Administrstion (Budget)                            l          970    1,190     _,230  2           "                r  .C) o.2         66        8 ' '   `
Tn* -                                                            07     1.00 v0          1,s6o    zY,o                                    .
z,  , =r < evnues                                         9 TO     C, l7 C  1 :DwU ; ;!    1 .6'    r5, '\   ' ln          10    .eSu      So           L 
Thccose                                                  21`!    '17      2)0 r     '6fl    L7u     u+0        70 l0                          ( .' T
Sales                                                   .1,c     :LS       150       }    50 x:      60       (Ź,0      80(         C)
ExcitSe                                                   80      100       oC)    T4h      200j     2'90      610      530       %20(      65G       735
Stamp                                                     40       40       30      40      120      160       2',0     2,0       360       il0       5bL3
Firc;:gn. Trade                                          380      300     290      61.0     630     700o     1,360    11210     1S00      1,631    2,112
Other 3/                                                 110      110      '10      50      200     270       550       530       590     1,471     A., )6
V   )L. > Taelv18;1; IŁ:ven 9                                )V_      100      1-90      30     28Q                C70       760       76'0    7)9     II016
_,2                                            ~~~~~~~~~                                                    ~   ~~~~~~~~23  ~'1170(c  -)0
8  '!t' ':- I .,'ore,Jd!,S w,3., ,',J, id'o-ytner,-;   >,.      ,0-0     20,     ,>.2     .9 0,             . 72i
,_,~~~~ .,                                               C50   ,_,       ,Z cO            ._-           _.            .         _ __   a   r _  -=
nu<       'I       i     .                              2,                 'O. ~2.. =      u.-      _          ',~)7 
""'-Ouri  Con~~~~i-rl                    )!IO     nl)')   ~      136     0,0 10                  00    -4~1
,lrc ~ ~ ~ ~   ~   ~   ~  r                               LKO.,    12'-z1le  rOŁ.   98                                             21 Ji>,; , vS} ,/,c  glG Ir  r  i7   ,7  -  -
T  + I8 90                                             2   0      A?L!o  5,(iO   6 5CY2   10 i         i310 :603;oc       -
. ci.1 bDudget est.mTate.  stimatc for IT-VT not. available.
Bwoh:<. lata for HI-VI no- available.
Ot,her: tax revenue fcr `)-tte aljusted t.o Coform tc* rerisad totals and. may not he comparable v.tn
earl.c, years.
.Tcuding tax revenues of the decentralr-en agencles art s,          > .!   zo nrs  estimat,ed for , 9O5U
;u'lrce:  1inistry of Economy and Labor, Fiscal a:nalysis      4 V'ios.



Table 5.17: NATIONAL GOVERN?ENT REVENUES, 1961-1969
(in millions of 1969 pesos)
1961    1962    1963    1964    1965     1966     1967     1968     1969
I.  Central Administration (Budget)                        5.046   33540   37.29   27776   3.971   44139    5,659    5.369    5.720
a.  Tax Revenues                                      4,532    3,175   2,881   2,483   3,475   3,688    4,982    4,599    4,980
Income                                              981      620     605     587     833     947    1,165    1,024    1,100
Sales                                                700     547     432     451     603     670      796      854      930
Excise                                               374     365     317     316     355     423      476      566      600
Stamp                                                187     146      86      90     213     233      273      299      360
Foreign Trade                                     1,775   1,095      835     926   1,117   1,020    1,61?    1,291    1,400
Otherl/                                              514     402     605     113     355     394      654      566      590
b. Non-Tax Revenues                                      514     365     548     293     496     452      677      789      740
II.  Taxes Shared with Provinces                           -1495    1.022   1,C37   1,241      1.755   1.895  1.926   1.910    2.130
III.  Earmarked Taxes V                                      i.308     839     922   1,084     922     991    1,165    1,248    1,720
IV.  Tax Revenues (Ia. + II + III)                          7.336   5,036   4.814   4.808   6.152   6,574     8.074    7,759    8,830
V. Social Security Contributions                           1.962   1.496   1.729   2.212   2.411   2,449     3.686    3.522    3,510
VI.  Total Revenues (Ib. + IV + V)                          9.813   6.897   7       Jl1  7J.311  90 o        12.437   12,070   13.080
1/ "Other" tax revenue for 1964-66 adjusted to conform to revised totals and may not be comparable with earlier years.
I/ Including tax revenues of the decentralised agencies and special accounts (estimated for 1961).
Source:  Ministry of Economy and Labor.



Table 5. j:  IMPORT DUTY PERFORMANCE, 1966-69
Percentage Change from
Pr evi Ol1 YaAr
1966          1967          1968          1969      1967       1968      1969
Imports (in millions U.S. Dollars)  1,12h.31      1,095.Sh     1,169.19      1,556.0      -2.56      6.72      33.10
Average Exchange Rate
(Pesos to U.S. Dollars)             2.089        3.326         3.50          3.50         59-25      5.21       --
Imports   (in millions pesos)       2,348.6       3,644.5      4,092.2       5,i446.o     55.18      12.28     33.10
Imports Subject to Duty
(Percent of Total Imports)             48.82        51-15          48.o6        53.0 -     4.77      -6.04     10.27
Import Duty Collectionsv
(in millions pesos)                  608           739           776         1,061        21.5h      5.00     36.7
Effective Customs Rate
All Imports                         25.8          20.0         18.9          19.5     -21.71     -6.43       3.17
Effective Customs Rate
Imports subject to duty             53.0          39.6          39.5         36.7     -33-84      0.39      -7.09
1/ Estimated on the basis of data for first nine months.
a/ Includes Miscellaneous Customs Charges and Import Surcharges.
Source: Ministry of Economy and Labor: Tariff Policy Bureau



Table 5.19: TREASURY OPERATIONS, 1966-71
(in millions pesos)
1966    1967     1968    1969     1970-/  1971-/
Total Revenues                               2,995   4,899   5,265    5,841   7 020    8,559
Budgetary revenues            27,o3 0               773     74     5,72     3       8,559
Nonbudgetary revenues                       157     136      186     118      217     -
Total Expenditures                           4,475   5 643   6,286    6,803   7 997    9,771
Budgetary expenditures                                                      7 63    9,771
Cash experditures                                                     33M,1 5   X   m  9,771
Changes in Treasury drafts                   84      -5      264      60       11     -
Nonbudgetary expenditures                   176     180      100     110      302     -
Deficit (-)                          -1,480    -744   -1,021    -962     -977  -1,212
(As percentage of
experditures)                        (33.1)  (13.2)   (16.2)  (14.1)  (12.2)   (12.4)
Financing                                    1 480     744    1,021     962      977   1 212
-External Financing, net                  'Yig      _U              T71      -r 281
Credits                                     ...       50     334     473      436     540
Amortization (-)                            ...    -299     -354    -279     -155    -140
Central Bank                                989     643      347     338      502     -
Unified Fund                                154      375      -3      79      161     -
Treasury bills                              -22     131      114      40      -99     -
Debt Cancellation certificates               93     -149      63      14       70     -
Internal public works bonds 3/               -       -       269     370      390     347
Treasury drafts                              84      -5      264      60       11     -
Other                                        56      -2      -13    -133W     339li/ -307
1/ Revised budget estimate.
2/ Budget; breakdown not available.
3/ Gross Placement.
4/ Includes mainly amortizations of internal public works bonds.
Source: Ministry of Economy and Labor.



Table 5.20: TREASURY REVENUES, 1966-71
(in millions pesos)
1966      1967     1968     1969      1969-    1970-      1971
Budgetary Revenues                         hj838     14763    5,079    5 721     5 765     6 692      8,559
Tax Revenues                             2,       g ,       14 313 2              117 543
Taxes on income                                     82      _ 982 1,099           1,025  1  6
Income tax                             I                   31      993                , 1       I
Surtax on income tax                    67      112        71       3L        20       320OL      133
Other                                   214       35       50       72        53        81         83
Taxes on capital and wealth             :161       395      289      330      147        591        545
Substitute inheritance tax              71       I5                iT2       17                   TTiT
Tax on revaluation of assets             1         2      116       31        68        25         -
Emergency tax on car ownership          87         1        -       -         -         230       217
Emergency Tax on real estate            -       293        10       -         -          -
Tax on agricultural land                -         -        -       120       185       1140       131
Other                                    2        10       11       23        20         19        22
Taxes on production, consumption,
and internal transactions              1 026    1 156     1 861    2,156     2,222     2,17L     3 266
Sales taxes                          h49         669     -i       '930       972     1,077     T4129
Excise taxes                           292      399       528      595      613        682        735
Stamp taxes                            -61       231      290      363       330       391        548
Fuel taxes                              58       113      203      230       256       2143       762
Other                                   56        13       39       38        51         81         72
Taxes on foreign trade                   696     1,358    1 208    1,397     1 117     1,306      2,128
Import duties                          _77   5   691       66      9  2-                932     1,1H
Export taxes                            72       625      510      133       300        360       760
Customs charges and fees                b6        12       29       15       149         12        16
Nontax revenues                          309       573      766      711       951        835     1 C]6
Post office receipts                   107        7-      7221     279                  230 70-  i70
Miscellaneous fees                      15        h11      52       86        3/         3/        3/
National Lottery Surplus                11        15        61      24        96        _
Interest                                3/        67       52       114       3/         3/        3/
Other                                  176       253       377     338       596        585        Ł96
Nonbudgetary revenues                   .157       136       186     118      ...        ...         ...
Total Treasury revenues              2,T39T    14,i79   5,726    5,TT      5,765     T6,92
1/ Budget.
2/ Special tax: "Blanqueo de capital".
3/ Included with other non-tax revenues.
Source: Secretariat of Finance.



Table 5.21: TREASURY CASH EXPENDITURES, 1967-70
(in nillion8 peaos)
Budget Budget
1967    1968     1969    1969     1970
Budgetary Expenditures                         5 468    5922    6.633    6 648   7,4
Current Expenditures                         4,29    46               4,9      5,614
Personnel                                  1,920   2,199    2,700   2,660    3,173
Retirement and Pension Payments              325      324     230      1/      1/
Goods and services                           545      584     603     ;40 h84
Interest                                     277      274     221     237      335
Transfers to Public Sector                 1,082      964   1,145      953   1 130
Special Accounts                            60      7        72     79        5
Decentralized Agencies                     419     457      589     514      609
State Enterprises                          597     400      396      308     262
Provinces                                    1       27      50        -      15
Other                                        6       17      38       82     185
Transfers to Private Sector                  131      137     162      215     575
Unallocated                                     -       -       -      195      17
Economies (-)                                  -        -       -        -    -300
Investment Expenditures                      1 190   1,439    1,572   1 948    1 910
Fixed Investment                             2        337     433      521     6
Transfers to Public Sector                   892  1086     1 129   1,391    1,337
Special Accounts                             3        4      14       30      30
Decentralized Agencies                     223      324     283     308      197
State Enterprises                          435     596      619     615      572
Provinces                                  216     145      205     4od      335
Other                                       17      17        8      38      203
Transfers to private sector                   94       17      10       11      11
Unallocated                                    -        -       -       25      18
Economies (-)                                   -       -       -    -200     -100
Nonbudgetary Expenditures                        180      100     110      ...      ...
Transfers                                       7       7                ...
Special Accounts                               T        -       -
Decentralized Agencies                         -        2      28      ...
State Enterprises                             36       35      24      ...     ...
Provinces                                      2        -       -
Other                                          -        5       3
Other Expenditures                               138       58      55      ...     ...
Total Treasury Expenditures                    5,648    6,022   6,743    6,648   7,524
1/ Included in Transfers to Private Sector.
Source: Secretariat of Finance.



Table 5.22 :ANALYSIS OF TAX BURDEN 1960-1969
(in millions pesos)
1960       1961       1962      1963      1964       1965      1966      1967        1968       1969
Total Taxes                           1.419.2    1,933.6   2 194.4   2,857.7    3,717.4   5 297.4   7,586.4    11.389.4   12.699.7   13 921 2
National Taxes                        1159.4     v579.1   1003.2     t2,32.    2,962.8   46266.7               9,526.6   10,466.4   11!503:6
As % G.N.P.                             12.1      13.9      12.8      13.4       12.6      13.2      15.5        18.4       17.2       16.6
Rate of growth                         59.9       36.2      14.2      29.1       28        45.4     13.2        50.1        9.9       10.5
As % of total taxes                     81.7      81.7      82.2       81.5      80.2      81.8      82.6        83.6       82.6       82.6
Provincial Taxes                        206.6      275.1     289.4     392.0      580.0     778.9   1,023.4     1,435.2    1,746.21/  1,863.1 1/
As % G.N.P.                              2.2       2.4       2.1        2.2       2.4       2.4        2.5        2.8        2.9        2.7
Rate of growth                         71.5       33.2       5.2      35.4       47.9      34.3      31.3        40.2       21.7        6.7
As % of total taxes                     114.6     14.2      13.2      13.7       15.6      214.7     13.5        12.6       13.7       13.4
Municipality of Buenos Aires              53.2      79.4     101.8     137.2      154.6     182.6     296.3       427.6      487.11/     554.51/
As % of G.N.P.                           0.6       0.7       0.7       0.8        0.7       0.6       0.7         0.8        0.8         o.8
Rate of growth                         60.6       49.1      28.2      34.7       12.7      18.1      62.2        44.3       13.9       13.8
As % of total taxes                      3.7       4.1       4.6       4.8        4.2       3.5       3.9         3.8        3.7        4.0
Total taxes as % of G.N.P.
at market prices                       14.8       17.0      15.6      16.5       15.7      16.2      18.8        21.9       20.8        20.1
1/ Staff estimates.
Source:  Ministry of Econoay and labor



Table 5.23: COLLECTION AND ALLOCATION OF TAX RECEIPTS1"
(in millions pesos)
1966       1967        1968         1969       1970
Budget
Collected by
Internal Tax Office                 3,515      5,102       5,886        6,749      8,270
Customns Office       2/              791      1,489       1,357       1,478       1,304
Social Security System-             1,549      2,802       2,979:      3,107       3,506
Provincial tax offices              1,004      1,437       1,827        2,211      2,873
Other                                  74        136         150          154        165
Total 6,933     10,966      12,199       13,699     16,118
Allocated to
Treasury                            2,529      h,190       4,313        4,982      5,856
Special accounts and
decentralized agencies3/            345        600         853       1,5074/     1,6254/
State enterprises     *2/             123        207         173        5/          5/
Social Security System-             1,549      2,802       2,979       3,107       3,506
Provincial governments              2,354      3,102       3,742        4,103      5,131
Other (including private
sector)                              33         65         139        5/         5/
Total 6,933     10,966       12,199      13,699     16,118
1/ Excludes municipal tax receipts and some social security contributions.
2/ Excludes estimated contributions made by the Treasury as an employer.
3/ Includes some earmarked taxes which are ultimately transferred to the
provinces and the private sector.
4/ Includes State Enterprises and Other.
_/ Included in 4/.
Sources: Secretariat of Finance; Secretariat of Social Security; Federal
Investment Council; Internal Tax Office; and staff estimates.



Table 5.2h: SOURCES AND ALLOCATIONS OF TAXES EARMARKED TO THE
NATIONAL ENERGY FUND AND THE NATIONAL
AND PROVINCflAL ROAD FUNDS, 1966-70
(in millions pesos)
Budget
1966     1967      1968     1969     1970
Sources                                     387       677      841    1,09h    1,457
Gasoline tax                               259      531      611       803    1,171
Tax on tires                               35        51      111      171      170
Taxes on Sales and Transfers of
Motor Vehicles                           36        37       50       h6         5
Other Taxes on Oil Products
and Tires                                32         9       16       11       11
Tax on Electricity                         16        ho       39       36        35
Tax on Gas                                            -        3       20        13
Tax on Exports for Rural Roads               9        9       11        7        12
Vehicle Ownership                                     -        -        -        40
Allocations                                  387      677      8h1    1,094     1,h57
National Energy Fund                       1h8      268      265      296       323
National Road Fund                         193      3h0      473      698     1,020
Provincial Road Fund                       h6        69      103      100       11h
Source: Ministry of Economy and Labor.



Table 5.25: OTHER EARMARKED TAXES
(in millions pesos)
1966      1967     1968     1969   B    7
2.35% Sales Tax on Cattle
(J.N.C.)V                                 12        14        16       19        18
Apprenticeship Tax (C.N.E.T.)               18         23       33        31       35
19% Export Tax (I.N.T.A.)                   39         58       58        69       75
2.5% Cereal Export Tax (J.N.G.)             25         28       44        35       37
Total                          94       123      151       154      165
1/ Represents only 25 percent of receipts. The remaining 75 percent goes
directly to the employees social fund.
Source: Ministry of Economy and Labor.



Table 5.26:  TAXES ON FOREIGN TRADE, 1962-71
(in million pesos)
1962     1963     1964     1965     1966       1967       1968       19651"    1970 2/   1971 3/
Total Taxes on Foreign Trade                 327*2    312.0    390.2    644.3    711.8    1,467.9    1,389.9     1,548.4    1,431.0    2,112.0
Central Administration Share              (300.0)  (290.0)  (410.0)  (630.0)   (700.0)  (1,360.0)  (1,210.0)  (1,400o0)
Taxes on Exports                             127.1     29.4     24.7     62.6    104.3      693.5      614.3       487.3      475-0      760o0
Export Profits Tax                           0.1      0.1      0.1       -        -           -          -          -
Statistical Tax                              5.7      5.7      7.6     12.7     22.3       35.8       39.7        54.4
Export Taxes                                 1.8     23.7     17-0     bQQ      pqfl       76- 5       3 3
Export Taxes (B.C.R.A.)                    119.5       -        -        -        -          -           -          -
Export Taxes (Ley 1409/67)                    -        -        -        -        -         2.3        1.5          -
Export Taxes (Ley 17.198)                              -        -        -        -       578.9      569.7       432.9
Taxes on Imports                             198.4    282.4    365.4    581.7    607.5      738.8      775.6    1 061.1       956.0    1,352.0
Customs Duties                                       431.7  .32  *55. -         16.1                  -I5 1.4     15.1
Customs Duties (Ley 11917 and 11918)       156.7    225.1    282.2    445.7    283.1      437.7       71.6          -
Customs Duties Surcharge (Ley 11452/62)       -      14.1     27.7     41.5      3.8        1.6        0.1          -
Customs Duties  Surcharge (Ley 16690)         -        -        -       8.1    304.5      294.0      702.5     1,045.9
Other                                          1.7      0.1       -        -        _        35.6          -          -
Consular Fees                                                   -        -        -          -           -          -
Foreign Exchange Surcharge                    -        -        -        -        -        35.6          _          _
1/ Preliminary data.
2/ Revised budget estimate; breakdown not available.
_/ Budget; breakdown not available.
Source:  Ministry of Economy and Labor - Direccion Nacional de Investigaciones y Analisis Fiscal.



Table 5.27:  CIVIL EMPLOYEES OF THE NATIONAL GOVERNM1EWI/ 1966-69
(In thousands)
May 1               Dec. 31
1966    1967   1968    1969     1969
I.  Central Administration             256.5   254.9  256.1   257.7     255.3
II.  Security and Defenseg_              33.4   34.7    35.3    37.2      36.9
III.  Decentralized Agencies             194.0  197.3   203.9   202.9     203.5
of which:
National Education Council3/     (51.3)  (53.8)  (53.9)  (65.3)   (64.1)
National Council for Technical
Education                       28.1    28.8    30.5   31.5      32.1
Universities                      43.5    45.1   48.3    49.8      50.9
Water and Sewage Administration   22.1    22.1    24.2   23.9      23.2
National Highway Administration   13.2    13.3    14.5   15.2      15.6
IV. State Enterprises                   311.7   308.2  289.9   279.9     276.3
of which:
State Railroads                  172.2   170.2   162.3  155.1     151.5
State Petroleum Co. (YPF)         40.9    40.6    38.2   34.7      34.2
State Telecommunications (ENTEL)  39.3    39.2    37.6   38.8      40.2
Water and Electricity Enter-
prise                           14.6    14.9   114.5   14.4      13.9
Total                              795.6   795.2  785.2   777.7     772.0
1/ Does not include contract and temporary employees.  At the end of 1969 these
employees numbered 114,812.
2/ Including; Prefectura Naval Argentina, Federal Police and Civil Employees of
the National Gendarmeria.
)/ Included in Central Administration.
Source: Ministry of Economy and Labour.



Table 5.28: PUBLIC SECTOR FINANCES, 1968-76
(in millions of 1969 pesos)
1968     1969     1970      1971    1972     1973     1974     1975     1976
Central Government
Current revenues              11,708  12,253   12,901    13,340   14,461   15,270  16,131   16,905   17,859
Current expenditures          9,515   10,129   10,228    10,790   11,290   11,911  12,616   13,221   13,856
Current Surplus                2,193   2,124    2,673     2,549    3,171    3,359    3,515   3,684    4,003
Savings ratio                   .187     .173    .207      .191     .219     .220     .218    .218     .224
State EnterprisesL
Current revenues              6,529    6,680    6,609     7,001    7,517    8,020   8,415    8,810    9,219
Current expenditures           5,397   5,520    5,476     5,773    6,118   6,399    6,674    6,924    7,208
Current surplus               1,132    1,160    1,133     1,228    1,399    1,621   1,741    1,886    2,011
Savings ratio                   .173     .174    .171      .175     .186     .202     .207    .214     .218
Provincial Governments
Current revenues              4,869    4,856    5,461     5,199    5,493    5,803   6,131    6,477    6,842
Current expenditures           3,387   3,913    4,054     4,160    4,388   4,629    4,884    5,152    5,435
Current surplus               1,482      943    1,407     1,039    1,105    1,174   1,247    1,325    1,407
Savings ratio                   .304     .194    .258      .200     .201     .202     .203    .204     .206
Public Sector
Current revenues              23,106  23,780   24,971    25,540   27,471   29,093   30,677  32,192   33,920
Current expenditures         18,299   19,562   19,758    20,723   21,796   22,939  24,174   25,297   26,499
Current surplus               4,807    4,227    5,213     4,817    5,675    6,154   6,503    6,895    7,421
Savings ratio                   .208     .178    .209      .189     .206     .212     .212    .214     .219
9' Including SOMISA, HIDRONOR, SEGBA.
Source:  1970-71, Bureau of the Budget; 1972-76, mission projections.



Table 5.29: AJiUAL PERCENT CHANGE IN PUBLIC SECTOR FINANCES, 1969-76
1969     1970    1971     1972     1973     1974   1975
Central Government
Current revenues               4.6     5.3    3.4      8.4      5.6     5.6    4.8
Current expenditures           6.4     1.0    5.5      4.6      5.5     5.9    4.8
Current surplus               -3.2    25.8   -4.6     24.4      5.9     4.6    4.8
Marginal savings ratio         -.127    .847   -.282    .555     .232    .181    .218
State Enterprisesi/
Current revenues               2.3    -1.1    5.9      7.4      6.7     4.9    4.7
Current expenditures           2.3    -0.8    5.4      6.0      4.6     4.3    3.7
Current surplus                2.5    -2.3    8.4     13.9     15.9     7.4    8.3
Marginal savings ratio          .185    .380    .242    .331     .441    .304    .367
Provincial Governments
Current revenues              -0.3    12.4    -4.8     5.6      5.6     5.6    5.6
Current expenditures          15.5     3.6     5.5     5.5      5.5     5.5     5.5
Current surplus              -36.4    49.2  -26.2      6.4      6.2     6.2     6.2
Marginal savings ratio        41.461    .767   1.404     .224    .222    .222    .225
Public Sector
Current revenues               2.9     5.0     2.3     7.6      5.9     5.4     4.9
Current expenditures           6.9     1.0     4.9     5.2      5.2     5.4     4.6
Current surplus              -12.1    23.3    -7.6    17.8      8.4     5.7     6.0
Marginal savings ratio         -.860    .828   -.696     .444    .295    .220    .259
I/ Including SOMISA, HIDRONOR, SEGBA.
Source: Table 5.27.



Table 5. 30;  PROJECTED REVENUES AND EXPENDITURES OF THE STATE ENTERPRISES
(in millions of 1969 pesos)
1968    1969     1970    1971    1972    1973     1974    1975    1976
SOMISA
Current revenues                620     708      673     816     945   1,00'   1,013    1,055   1,101
Current exoenditures            450     "21      483     592     674     683     687      687     704
Surplus                         170     187      190     224     271     322      326     368     397
HIDRONOR
Current revenues                  -       -        -       -       -      53     106      111     119
Current expenditures              -        -       -       -       -      12       36      32      29
Surplus                           -       -        -       -       -      41       70      79      90
SEGBA
Current revenues                671     697      586     729     770     795      818     842     869
Current expenditures            396     442      369     431     45°     469     487      505     524
Surplus                         275     255      217     298     320     326     331      337     345
State Railways
Current revenues                797     833    1,018   1,041   1,14,-Ź  1,254  1,295    1,335   1,363
Current expenditures          1,110   1,193   1,273    1,269   1,302   1,308   1,311    1,309   1,315
Deficit surplus                -313    -360     -275    -228    -i57 -X4          -16      26      48
Other State Enterprises
Current revenues              4,441   4,442   4,332    4,441r  4,657   4,913   r5,183   5,467   5,767
Current expenditures          3,441   3,364    3,351   3,481   3,692   3,927   4,153    4,391   4,636
Surplus                       1,000   1,078      981     934     965     986   1,030    1,076   1,131
Total State Enterprises
Current revenues              6,529   6,680   6,609    7,001   7,517   8,020    8,415   8,810   9,219
Current expenditures          5,397   5,>20    5, 476  X,773   6,118   6,399    6,671   6,'924  7,208
Surplus                       1,132   1,16o    1,133   1,228   1,399   1,621    1,741   1,886   2,011
Source:  Ministry of Economy and Labor and mission estimates.



Table 5. 31: ANNUAL PERCENT CHANGE IN PROJECTED REVENUES AND EXPENDITURES
OF THE STATE ENTERPRISES, 1969-75
1969    1970  1971   1972   1973    1974   1975
SOMISA
Current revenues          14.2    -5.0  21.2   15.8    6.3     0.8    4.1
Current expenditures      15.8   -7.3   22.6   13.8    1.3     0.6    0.0
Surplus                   10.0     1.6  17.9   21.0   18.8     1.2   12.9
HIDRONOR
Current revenues             -       -     -      -      -   100.0    4.7
Current expenditures         -       -     -      -      -   200.0  -11.1
Surplus                      -       -     -      -      -    70.7   12.8
SEGBA
Current revenues           3.9   -15.9   24.4   5.6    3.2     2.9    2.9
Current expenditures      11.6   -16.5   16.8   4.4    4.2     3.8    3.7
Surplus                   -7.3   -14.9   37.3   7-4    1.9     1.5    1.8
State Railways
Current revenues           4.5    22.2    2.2  10.0    9.5     3.3    3.1
Current expenditures       7.5     6.7   -0.3   2.6    0.5     0.2   -0.2
Deficit/surplus          -15.0    29.2   10.6  31.2   65.6    70.4   262.5
Other State Enterprises
Current revenues           0.0    -2.5   1.9    5.5    5.5     5.5    5.5
Current expenditures      -2.2    -0.4   3.9    6.1    6.4     5.8    5.7
Surplus                    7.8    -9.0  -4.8    3.3    2.2     4.5    4.5
Total State Enterprises
Current revenues           2.3    -1.1    5.9   7.4    6.7     4.9    4.7
Current expenditures       2.3    -0.8    5.4   6.0    4.6     4.3    3.7
Surplus                    2.5    -2.3    8.4  13.9   15.9     7.4     8.3
Source: Table 5.28.



Table 5.32:  PUBLIC SECTOR REVENUES AND SAVINGS AS PERCENTAGE OF GROSS DOMESTIC PRODUCT, 1969-76
1969      1970     1971      1972      1973      1974     1975      1976
Gross Domestic Product           70,087    73,455    77,495    81,757   86,254    90,998    96,003  101,283
(in millions 1969 pesos)
Revenues:
Central Government               17.5      17.6      17.2     17.7      17.7      17.7     17.6      17.6
State E.nt.ernrises               9.5       9.0       9.0      9.2       9.3       9.2      9.2       9.1
Provincial Governments            6.9       7.4      6.7       6.7       6.7       6.7      6.7       6.8
Total Public Sector              33.9      34.0      33.0     33.6      33.7      33.7     33.5      33.5
Savings:
Central Government                3.0       3.6       3.3      3.9       3.9       3.9      3.8       4.0
State Enterprises                 1.6       1.5       1.6      1.7       1.9       1.9      2.0       2.0
Provincial Governments            1.3       1.9       1.3      1.4       1.4       1.4      1.4       1.4
Total Public Sector               6.o       7.1       6.2      6.9       7.1       7.1      7.2       7.3
Source: Table 5.27.



Table 5.33: FOREIGN EXCHANGE COMPONENT OF PROPOSED PUBLIC SECTOR INVESTMENT PROGRAM FOR 1971-75
(in millions of 1969 pesos)
Total       Cost  of          Ratio  of      Foreign Exchange Component
Program    Projectizable     Projectizable     of Projectizable Portion
Cost         Portion           Portion       (in mil-        (As % of
lions       Projectizable
(in millions pesos)            (%)          pesos)        Portion)
NATIONAL GOVERNMENT FIXED INVESTMENT
1. Agriculture and Livestock                      684             412             60               62           15
2.  Industry and Mining                         1,503           1,503            100              799           53
SONISA                                    1,014          1,014             100              502           50
Direccion General de Fabricaciones
Militares                                 489             489            100              297           61
3. Power and Fuel                               9,231           7,156             78            2,337           33
HIDRONOR                                  1,360           1,360            100              705           52
SEGBA                                     1,385           1,385            100              529           38
Agua y Energia Electrica                  1,252             814             65              175           21
Secretaria de Energia                       631             631            100              211           33
Atomic Power                              1,042             700             67              221           32
YPF                                       2,716           1,716             63              343           20
Gas del Estado                              845             550             65              153           28
4.  Transportation                              8,349           7,170             86            2,768           39
Railway modernization                     2,503           2,503            100           1,082            43
Roca electrification                        147             147            100               73           50
Subway extension                            152             152            100               38           25
Roads                                     3,034           2,184             72              551           25
Ports and Waterways                         515             335             65               59           18
Port administration                         425             276             65               55           20
River shipping                               61              61            100               13           21
Ocean shipping                              874             874            100              438           50
Airlines                                    419             419            100              393           94
Airports                                    219             219            100               66           30
5.  Communications                              2,134           1,661             78              404           24
ENTEL                                     1,503           1,503            100              360           24
Secretaria de Comunicaciones                631             158             25               44           28
6.  Education                                     870             696             80              174            25
7.  Sanitation                                    430             215             50               43           20
8.  Public Health                                  504            -               -               -             _
9.  Housing                                     1,354             100              7               14           14
10.  Others                                       2,287            -                -              -              -
Sub-Total                                     6          18,913             69            6,601           35
National Government Financial
Investment                                   1,761             367             21              114           31
Provincial and Municipal Investment             9,518           1,983             21              500           25
TOTAL                                    38,625          21,263             55            7,215           34
Source: IBRD staff based on CONADE Plan and information obtained from various Government entities.






Table 6.1: CONSOLIDATED SUMMARY OF THE ChENTRAL BANK AND COMMERCIAL BANKSt ACCOUNTS,
1965-OCTORER 1970
(in nmllions of new pesos)
October
1965    1966      1967     1o968     1969       1970
External Sector                                         554     663     1,829    2,177    1 632        2,687
Gold and Foreign Exchange                             T5U     1       1,132    1,1111     41         1-580
Exchange Rate Adjustment                              424     599       565      625      674          744
Contributions to International Organizations          100     146       392      457      558          575
Obligations to International Organizations           -128    -232     -260       -16      -16         -220
Public Sector   Net1/                                 2 654   3 748     3 740    3796      4 032       4 180
Ner   1 /,....
National Gove rnent-                    1/          3,41    ff7i 6
Other Governments and Official Agencies-             -756    -793    -1,782   -2,189   -2,376       -2,678
Private Sector                                        5 003   6 376     8 402   12,089    15 182      17 071
Loans:  General                                     t                7t1T7     TJ- 106  3   8
Mortgage                                      390     41-     509       559      604          735
To Foreign Currency                           132     353      418       553      620          905
Investment in Financial Paper                           2       2         2       20       36           37
National Grain Board2]                                312      114      224      294       29)4        314
Assets = Liabilities                              8,211  10,787   13,971    18,062   20,846       23,938
Money and Quasi-Money                                 7 313    9 611   12,568   16 334    18,515      21 248
Money                                               t.      6   775,716        11050   12,231       13.480
Currency in Circulation                           2                  ,       5,915    6,589        6,462
Demand Deposits                                   2,009   2,748     3,629    5,135     5,642       7,018
Ouasi-Money                                         2,338    2,894    3,852    5,284     6,284       7,768
Capital, Reserves, etc. Net2'                         785     952     1,286    1,842     2,247       2,500
Sterilized Funds                                       73      52        70       53        45           5
Miscellaneous Accounts                                 40     172        47     -167        39         185
1/ Net of official deposits.
2/ Recorded officia]ly in public sector.
3/ Patrimonio, net.
Source: Boletin Estadistico, B.C.R.A.



Table 6.2:   THE CENTRAL BANK:   SUNNARY ACCOUNTS, 1965-OCTOBER 1970
(in millions of new pesos)
October
1965    1966     1967     1968    1969      1970
External Sector                                             658     838    2,106   2 541    2 115    3,169
Gold and Foreign Exchange                                         325   I 32  1-      8      99    2,070
Exchange Rate Adjustment                                 424      599      565     625      674      744
Contributions to International Organizations              100     146      392     457      558      575
Obligations to International Organizations               -128    -232     -260     -16      -16     -220
Public Sector, Net                                        2 513   3,517    4.119    _L557   4 920    5 175
National Government                                             3,526      137             '959
Loans, NetI                                             b7b     982   1,i      1,604               53
Public Financial Paper g                             1,647    2,544   2,726    2,981    3,037    4,705
Other Governments and Official Agencies, Net-I/           -10      -9      -18     -28      -39      -70
National Banks                                            1 231   1,171    1 479   1 594    1,755     1 607
Rediscounts and Other Advances                            7t      710      9 3   1,3     1,1 9       9
Industrial and M'ortgage Paper                           457      461      526     551      596      702
Other Current Assets, Net                                   -56     -50      -71     -102    -123      -164
Assets = Liabiliti.es                                   4,3146  5,476    7,633   8,590    8,667    9,785
Currency in Circulation                                   3,71 7  4 586    6,223   7 136    7 798    8 229
Private                                                 2,09ir 3                   ,969 5,07 
Banks                                                     508     617    1,136   1,221    1,209    1,767
Deposits, Current Accounts of National Banks                642     652    1,180   12230      643     1,353
Capital, Reserves, etc. Net3/                               157     186      160      171     181       198
Sterilized Funds                                             73      52       70       53      L5         5
1/ Net of deposits.
2/ Includes Bonos de Saneaniento Bancarios.
3/ Patrimonio, net.
Source:   Boletin Estadistico, 9.C.CR.,.



Table 6.3:   THE COMMETCIAL BANKS:    SUMMARY ACCOUNTS, 1965-OCTOBEP. 1970
(in millions of new Pesos)
October
1965      1966     1967     1968      1969      1970
Cash on Hand                                             1 10     1 213    2 3]5    2 473     1 819     3 136
Cash                                                    '908     '617   T
In B.C.R.P..                                             632      596   1,179     1,252       610    1,369
Fxternal Sector                                           -104     -175     -277     -364      -483      -482
Public Sector, Net                                         126      217     -400      -792     -930    -1,065
National Gy                                                     1 0     1i7,h     1 399     1   8     1 614
Loans, Neta/ 33                                                            850 d
Public Financial Paper                                 522      551      533      586       648       666
Other Governments andl Official Agencies                -760     -797  -1 784    -2 191    -2 378   -2 680
Loans, Net&/                                          -767      Bs'7           -2,19     -2,385 
Public Financial Paper                                    7      10        8         7        7         7
Private Sector                                           4 613    5,962    7,893   12,530    11,578    16,336
Loans:                                                                           11,21b    1h 248   15,T985
Advances, Discounts, etc.                            41 367                                       15 10 3  T   T,060
In Foreign Currency                                    132      353     W18       553       620      905
Nationnal Grain Board                                    31.2     114      224      294       294       316
Private Financitl Paper                                    _        2        2        20      -7         -7
Other Current Assets, Net                                    58     -51       72      342       209        74
Assets    l Liabilities                                5,883    7,166   9,603    13,189    15,193   17,99'
Private Deposits                                         1,332    5 628    7 460   10 388    11 88h    14,713
Demrand Deposits                                       2,009    2         m        ,                  7,018
Time Deposits, etc.                                    2,323    2,880    3,831    5,253     6,242     7,695
Obl:igations to B.C.R..A.                                   873     772    1,017    1,130     1,243       983
Capital Reserves, etc. NetJ                                628      766 :1,1 2                          2,302
1/ Net of deposits.
7/ Patrimonio, net.
Source, Boletin Estadistico, B.C. R.A.



Table 6.4: THE MORTGAGE INSTITUTIONS : SUMMARY ACCOUNTS 1965-OCTOBER 1970
(in millions of new pesos)
October
1965   1966    1967    1968   1969    1970
Cash on Hand                        44     61     102     104    148     229
Cash                               1      2       1       2     T4    
In Banks                          43     59     101    102     11T     226
Liquid Assets                        6      -      40      66    130     119
Loans                              572    797   1,092   1 589  2 301   2 825
0f which Mortgage Loans          §5T   T78    1        X       5      t
Other Current Assets, Net           78     91     160     198    114      83
Assets = Liabilities             750    9I;   1,7Ti   1, 57  2,977   3,25w
Deposits                           221    424     726   1 130  1 675   2 002
Of which Time Deposits           210            77 ).  ~     T     Xt
Domestic Obligations               387    411
Of which to BCRA                 370                    - E 1  .: i  17 .
External Obligations                 9     15      28      53    117     157
Capital, Reserves, etc.             83     99      133    217    296     346



Table 6.5: MONETABY SUMMARY, 1965-69
(in millions of pesos)
End of 1965                                              Eod of 1966  End of 1967    End of 1968                     End of 1969
Comm*r-    m                Coamer-  Ms4ne-              Commer-  MOem-              Commer-    Mono-              Comer-     Mona-
BCURA    cial     6az.    B3         cial    taRy      BCRA      cial    tary       BCRA     cial       tary      BCRL     cial       tary
Boa.ke    S'V 9             _anks                        Banks    System              Banks     System              Banks     System
Internatlonal Assets, Net                  658      -104     554      833      -175      6 6     2,106     -277     1,829    2,541      -364      2,177    2,115       -483     1,632
Domestic Credit
Government, Net                        2,528       126   2,654    3,531       217    37.-.    4,140      -400     3,740    4,588      -792      3,796    4,962      -930      4,032
Private Sector                           -       5,003   5,.03      -       6,5Th37      8 6     -      8,4C2     8,402      -      12,089     12,089      -      15,182     15,182
Banks                                  1,231    -1,231     -      1,171    -1L71 .7            1,479   -1,479       -      1,594    -1,594I       -      1,755    -1,755        -
Net All Other Accounts                  -286      -612    -898     -288     -_88   -1,? 6       -3C1   -.1,102   -1,403     -326    -l1402    ..1,728     -349     -1,982    -2a331
Net Assets - Monetary Liabilities        4,131     3,182   7,31?    5,252     4,359    9,611     7,424    5,1"4    12,568    8,397     7,937     16,334    8,483     10,032    18,515
Cosmercial Bank Reserves                 1,150    -1,150     -      1,269    -1,269      -       2,31.6  -2,316       -      2,451    -2,451        -      1,852     -1,852       -
Private Sector Money Supply              2,956     2,009   4 ,75    3,969     2 ,743   6,7-. 7   5,067    3,629     8,716    5,915     5,135     11,050    6,589      5,642    12,231
Notes                                  2,966       -      ,966       6.9                       5,087      -       5,087    5,915       -        5,915    6,589        -       6,589
Demand Deposits                          -       2,009   2,009      -       2,748                -      3,629     3,629      -       5,135      5,135      -       5,642      6,284
Quasi-money                                 15     2,323   2,338       14     2,880    2,694        21    3,831     3,652       31     5,253      5,284       42      6,242     6,284
Source: El Boletin Estadistico, Central Bank.



Table 6.6: CHANGES IN THE MONETARY SITUATION, 1965-69
(in millions of pesos)
Change during 1966        Change during 1967          Change Nu!ing 1968      Change during 1969
Mone-                       Mone-                    Mone-                    Mone-
Comnmercial tary           Commercial tary           Coxmnercial tary         Commercial tary
BCRA       Banks    System   BCRA      Banks    System   BCRA   Banks    System  BCRA      Banks   System
[nternational Assets     180      -71       109    1,268     -102    1,166    435      -87       308   -126     -119     -54h5
)omnestic Credit
Government, net       1. 001'3    91    1,09L      609     -617        -8    4448    -392    3   6    374     -138      236
Private sector          *-     1,373    1,373       -    -2,0216   2,026     -      3,6/87   3, 6l7    -     3,093    3, 093
Banks                  -60        60       -       308     -308             i15      -115       -     161     -161
Ne't,, all other
alcounte               -_    -276      -278      -13     -214     -227    -25      -300     -325    -23     -580     -603
qET ASSETS-MONETARY
iŽIBILITIES           1,121    1,177    2,298    2,172      785    2,957     973    2,793    3,766     86       i5    2 1 
.1ommercial Bank
Reserves                II?    -119        -     1,01.   -l   7        _     135     --o 135
Private Sector YMoney
Supply                1,003      739    1,742    1,1        881       999    828    1. 5'6   > ;      67h .O7 1,1B1
Notes                 1,003       -     1,003    l,I)f       _      15118    828               &J3    67h       -       67)4
Demand Deposits         -        739      739      -        881       881     -     1,5o6   1i,o6      -       507      507
Quasi-money               -1       557      556        7      951      958     10     1,422    1.h32     11      989    1,000
3ource: Table 6.5.



Table 6.7: COMPOSITION OF MONEY SUPPLY, 1961-OCTOBER 1970
Millions of Pesos             % Annual               Percentages
Currency in        Demand     Change in             Currency in  Demand
Year        Total  Circulation        Deposits Money Supply     Total  Circulation   Deposits
1961           2,054      1,217               837           -      100.0       59.3       40.7
1962           2,197      1,354               843         7.0      100.0       61.6       38.4
1963           2,829      1,671             1,158        28.8      100.0       59.1       4o.9
1964            3,956     2,278             1,678        39.8      100.0       57.6       42.h
1965           4,975      2,966             2,009        25.8      100.0       59.6       4o.4
1966            6,717     3,969             2,748        35.0      100.0       59.1       4o.9
1967            8,716     5,087             3,629        29.8      100.0       58.4       41.6
1968          11,050      5,915             5,135        26.8      100.0       53.5       46.5
1969          12,231      6,589             5,642        10.3      100.0       53.9       46.1
1970 October  13,480      6,h62             7,018           -      100.0       47.9        52.1
Source:  BCRA.



Table 6.8:  MDNEY AND QUASI-MONEY IN RELATION TO GDP:   1962-1969
1962       1963       1964        1965       1966       1967       1068        1969
Money Supply/GDP
kpercent)
Money and Quasi-money          21.6       23.3       2h.2       22.2        23.6       23.9       26.5       26.4
Money                      15.5       16.2       16.7       15.1        16.5       16.6       17.9       17.4
Quasi-money                 6.o        7.1        7.5        7.1        7.1         7.3        8.6        9.0
Change in Money Supply,Chage in
(percent)
Money and Quasi-money          10.5       30.8       26.6       17.1        29.6       24.9       41.6       25.7
Money                       6.5       19.2       17.8       11.1        22.5       16.8       25.8       13.9
Quasi-money                 4.0       11.6        8.8        6.o        7.2         8.1       15.8       11.8
Elasticity with respect to GDP
Money and Quasi-money          .49        1.32       1.10        .77        1.25       1.04       1.57       .97
Money                      .42        1.18       1.06        .74        1.36       1.01       1.44       .80
Quasi-money                .67        1.63       1.17       .84         1.01       1.11       1.82       1.31
(Millions of Pesos)
MEMD: Annual Change in
Money                      173        632      1,127       1,019      1,742      1,999      2,334      1,181
Quasi-money                107        380        554        549         556        958      1,432      1,000
GDP                      2,669      3,284      6,328      9,186       7,756     11,873      9,050      8,077
Source: Central Bank



Table 6.9: OFFICIAL FOREIGN EXCHANGE RESERVES, 1961 - March, 1971
(in millions U.S. dollars)
CENTRAL BANK
Gold &                                                                                    Net Position
Foreign                Bilateral    Exchange        IMF          Net       Treasury         of Monetary
Year      Exchange    S.D.R.     Balances    Liabilities    Position     Reserves   Liabilities       Authorities
1961        385.6       -         110.7        -399.9        -157.0        -60.6       -26.2             -86.8
1962        11.3        -          77.5        -381.]        -1h18.0      -337.3       -45,0            -382.3
1963        290.9       -          52.6        -351.6        -162.0       -170.1       -72.9            -213.0
1964        172.2       -          38&9        -218.2        -120.0       -127.1      -1147.7           -274.8
1965        252.2       -          28.9        -152.4         -76.0         52.7      -237.1            -i84.t
1966        225.2       -          35.6         -74.2         -30.0        156.8      -311L.o           -154.2
1967        713.7       -          27.1        -230.1          18.0        528.7      -250.1             278.6
1968        674.o       -          32.8        -210.1          96.6        593-3      -165.6             2?7.7
1969        434.6       -          22.1        -128,7         1.7.78        446.1      -98.4             347.7
1970        496.2      59.3        52.4         -37.8         130.2        700.3       -56.1             644.2
March 1971        397.9     107.L1       29.6         -20.6         115.2        629.5       -52.0             577.5
Source:  Central Bank; IYF



Table 6.10:   MONETARY SYSTEM, 1968-1971
(in millions of pesos)
198  961702l  16Change from Preceding Year
1968       1969        1970       1971-/2      .1969    %      1970     %      1971    %
External Sector                2,124       1,515      2,407       2,772         -609             892            365
Public Sector, Net             4,143       4,754      5,643       6,888          611             889          1,245
Treasury, Net               6,147       6,596      7,434       8,224          449             838            790
Other Public Sector        -2,122      -2,125     -2,311      -2,306        -   3            -186              5
Loans under Circular 618      118         283        520         970          165             237            45o
Private Sector                   655       7,459     20,529      25.,o4        3;8},f   27.8   3,070   17.6    4,515   22.0
TOTAL CREATION           19,922      23,728     28,579      34,704        3,806           4,851           6,125
Money and Quasi-Money         18,318      21,371      26,311     31,841        3,053    16.6   4,940   23.1    5>.,30  21.0
Patrimonia and other           1,60o       2,357      2,268       2,863          753             -89              595
Domestic Creation             17,798      22,213     26,172      31,932        4,415           3,959           5,760
Private Sector as Percent
of Domestic Creation            76.7        78.6       78.4        78.4
/1 Including mortgage institutions, special accounts of BIRA and CNAP.
/2 Estimated, Government program as of February 1971.
Source: BCRA.



Table 7.1: ACRICU11TUAL FWDUCTI0N, 196o/61 - 1969/70
(5o crups - volume in thousand tons)
196o/61      1961/62     1962/63      1963/616      1964±165      1965/66      1966/67      1967/68     1968/69      1969/70
Asparague                       1.1          1.1          1.4          1.3           1.4           1.5         1.7         3.5          3.2         3.3
Apricot                        16.0         15.4         13.4         13.5          12.1          12.7        17.5        17.6         17.5         17.0
Apple                         4124.7       397.0        474.0        371.0         544.1         414.0       515.5       669.6        6L36.4       645.7
Alfalfa                     6,453.0      6, 806.0o    6,524.5      6,133.0       5,508.0       5,6144.o    6,214.0     5,604.0      6,165.0         n.a.
Barley                        665.o       681.o         345.0      1,020.0         826.0         404.0       438.0       588.0        556.0       (570.0)
Bean (Haba)                     4.3         4.5           5.0          5.2           6.5           6.6         7.0         5.4          5.2         5.1
Been (green)                    6.3          6.5          6.2          5.7           6.0           4.5         4.8         4.6          3.8         3.6
Bean (Dry)                     33.0         24.3         32.6         29.2          38.3          29.8        27.3        22.9         31.9        47.6
Bean (Chaucha)                 20.7        25.5          27.1         23.2          25.9          23.4        24.3        27.0         30.9        23.7
Corn                        4,850.0      5,220.0      4,360.0      5,350.0       5,140.0        7,040.0    8,510.0     6,560.0      6,860.0      9,600.0
Canary Seed                    24.8         37.4         43.6         46.8          36.7          28.2        32.2        25.8        144.1        107.0
cotton                        393.1        34i.0        4±38.5       337.2         457.0         370.2       269.8       230.0        366.5        400.0
Chick-Pea                       5.7         4.5           4.9          5.7           6.0           3.9         3.5         4.0          4.8          4.5
Celery                         37.8         37.0         24.9         20.8          17.9          19.0        26.7        28.7         30.5          n.a.
Cherry                          2.6          2.3          2.4          1.9           2.2           1.8         1.8         1.9          1.4          1.9
Garlic                         35.5        31.8          30.2         33.7          43.8          41.4        42.4        41.2        146.1         49.2
Grapes for wine             2,082.9      2,368.9      2,575.7      2,611.6       2,236.5       2,675.1     3,485.9      2,655.8     2,264.3         n. a.
arapefruit                     40.2        67.3          49.5         60.5          72.3          84.0        81.8        86.0        112.3        134.0
Linseed                       562.0        818.0        838.6        771.0         815.0         570.0       577.0       385.0        510.0        580.0
Lentil                          4.6        11.1          12.1         11.9          16.5          15.6        12.9         8.2         16.2          8.9
Lemon                          86.6        82.0          79.3         79.0          70.0          89.0        76.6       179.0        196.0        207.7
Minoet                        260.6        215.0        154.5        189.0         113.0         186.6       226.1        228.7       195.5        184.0
Melon                          39.5         40.9         66.6         66.6          62.2          46.3        69.3         62.9        39.5         65.0
Mandarin                      196.0        i66.0        195.0        187.2         101.0          175.0      116.6        134.0       217.0        229.0
Oats                          843.0        700.0        687.2         9o6.o        806.5         680.0       540.0        690.0       490.0        425.0
Onion                         193.8        182.5        194.1         207.1        206.8          208.9      197.0        217.0       224.0         21.7
Orange                        521.0        518.0        496.5        528.0         620.0         616.0       660.6        682.0       820.5        861.0c
Pear                           76.0        116.0         98.0        105.2          86.6          82.0       1.18.6       111.8       102.6         93.6
Peach                         186.o        183.0        186.0        158.0         238.0          113.0      203.3        224.2       268.6        236.1
Plum                           41.7         66.5         39.0         43.o          63.7          41.2        63.0        63.5         61.5         66.2
Pea (Qreen)                    51.2         61.2         61.8         32.7          42.9          67.2        42.9        31.3         31.5         30.0
Pee (Dry)                      19.9         28.0         27.4         16.8          35.0          33.0        20.0        10.0         21.6         18.1
Potato                      2,071.7      1,186.6      1,453.6      1,692.6       2,689.0        1,686.3    1,797.2      1,966.6     2,360.1      2,335.6
Pepper (Green)                 58.9         59.0         59.9         68.5          61.1           73.8       67.5         75.4        72.5         85.0
Quince                         17.7         17.6         15.0         18.0          19.8          15.0        19.6        20.0         18.3         19.7
Rye                           505.0        510.0        163.1         538.0        651.5          245.0      270.0        352.0       360.0        377.0
Rice                          149.0        182.3        178.2         190.0        267.6          165.3      217.0        282.9       345.0        607.0
Strawbrr                        1.3          1.9          1.9          1.9           2.1           1.7         1.5         0.5          1.9          n.a.
Squash                        345.7        370.9        305.2        268.7         309.8         313.2       374.8        324.1       325.5        382.3
Sweet Potato                  388.2        366.8        365.5        341.5         340.5         362.2       463.6        379.0       479.5          n.a.
Sorghum                     1,252.0      1,394.0        952.2       1,267.0        857.0        2,130.0    1,380.0      1,897.0     2,686.0      3,860.0
Sugar cane                  9,650.0      9,778.0     11,950.0     11,827. 0     13,100.0       11,960.0    8,576.0      9,500.0    i0,680.0      9,555.0
Tobacco                        68.0         67.2         55.0         68.6          52.5          44.7        63.0        62.0         53.5         73.0
Tea                            25.9         26.6         49.8         56.1          61.5           83.1       65.1         67.5        88.6          n.a.
Tomato                        362.0        294.3        300.1         261.5        392.0          303.8      333.6        316.8       352.1        357.6
Wheat                       6,200.0      5,725.0      5,700.0       8,960.0     1.1,26o.0       6,079.0    6,267.0      7,320.0     5,760.0      6,650.0
Wild artichoke                 16.0         17.6         18.3          14.7         16.1           i9.5       45.9         52.1        62.6         65.2
Chicken feed
Seed                         13.3        16.7          15.0          16.5         19.7          16.8        26.6         19.9        26.9          n.a.
Straw                        20.3         20.1         19.0          20.6         26.1          35.0        31.9         25.8        38.6          n.a.
Terba mate                    126.5        137.6        156.2         161.8         78.0             -       145.0        130.0       100.0          n.a.
Watermelon                    176.3        176.6        165.6         179.8        190.7          166.1      185.3        166.8       186.6        109.3
n.a.: not available.
Source: Ministerio de Economia y Trabajo, Informs Ec-onomico, end mission estimates.



Table 7.2: GROSS OUTPUT OF AGRICULTURE BY SUB-SECTOR, 1960-69
Percent Crops
Year          Crops       Livestock       Total          of Total
(in billions 1960 pesos ./)
1960          125.8          93.9         219.7              57
1961          122.8         100.3         223.1              55
1962          134.0         107.4         241.4              56
1963          128.1         113.0         241.1              53
1964          143.0          94.9         237.9              60
1965          155.8          98.0         253.8             61
1966          139.1         1l0.4          249.5             56
1967          150.1         117.7         267.8              56
1968          141.6         120.6          262.2             54
1969          142.0         124.8         266.8              53
Growth Rate2/   1.8           2.6            2.2
1/ Retail prices.
7/ Percent annual compound.   Log y = a + bt.
Source:  CONADE, Plan Nacional de Desarrollo 1970-74, 1970, Volume 3,
p. 121.



Table 7.3: CONTRIBUTION OF AGRICULTURAL VALUE-ADDED TO GROSS DOMESTIC PRODUCT, 1960-70
Year              Agriculture                GDP                        Agriculture
Annual Growth Rate         Annual Growth Rate        as % of GDP at
Factor Cost
1960                     -                      -                          17.4
1961                   -0.8                    7.0                         16.1
1962                    1.8                   -1.9                         16.8
1963                    0.2                   -3.6                         17.4
1964                    7.1                    8.2                         17.2
1965                    6.1                    8.6                         16.8
1966                   -0.1                    1.0                         16.7
1967                    4.3                    2.3                         17.0
1968                   -3.9                    4.7                         15.6
1969                    4.4                    6.6                         15.3
1970                    1.6                    4.8                         14.8
Growth Rate
1960-70:                2.0                    3.7
Source:  B.C.R.A.



Table 7.4: PERCENTAGE DISTRIBUTION OF PUBLIC EXPENDITURES
FOR AGRICULTURAL DEVELOPMENT, 1956-1965
Function                      1956    1957    1958    1959    1960    1961     1962    1963    1964    1965
Research, Extension, and
Education                    12      11      25      20      23      17      30       28      24      29
Credit Administration          12      19      15      20      24      14      15       24      26      23
Grain Storage                  21      29      22      27      21      27       25      27      23      21
Plant and Animal Health        15      14      10       6       6       7        7       6      13      12
Other                          4o      27      28      27      26      35       23      15      14      15
Total                         100     100     100     100     100     100      100     100     100     100
Source: Fienup, R.H. Brannon, F.A.Fender, The Agricultural Development of Argentina,
Praegar, N.Y. 1969, pp. 376-379.



Table 7.5: THE TERMS OF TRADE FOR FARMERS, 1959-69
(1959-61 = 100)
Price of Inputs x 100      Price of Inputs x 100
Year                  Price of Wheat            Price of Cattle
1959                           122                         9b
1960                            95                         97
1961                            82                        110
1962                            76                        115
1963                            69                        101
196b                            77                         7b
1965                           115                         81
1966                           107                        108
1967                            93                        115
1968                           101                        116
1969                           103                        125
Source:  Secretaria de Estado de Agricultura y Ganaderia, Evoluci6n de
Precios de Insumos Agropecuarios Relativos a Carne Vacuna y
Trigo, 1959-69, 1970, Mimeographed.



Table 7.6:   WHEAT PRODUCTION, SUPPLY AND UTILIZATION,
BY CROP YEARS, 1959-1970
Year        Har-                     Begin-                              Apparent
Beginning    vested    Yield  Produc-   ning    Imports  Exports   Ending  Domestic
Dec. 1       Area             tion    Stocks                      Stocks     Use
(1,000   (100       --- (1,000 metric tons)            ----------------
ha.)   kg/ha.)
1959         L,378    13.3     5,637    1,h05     -      2,432    1,192     3,618
1960         3,622    11.6    h4,200    1,192     _      1,083      764     3,5L5
1961         E,12l    12.9     5,725      764     _      2,730      243     3,516
1962         3,745    15.2     5,700      243     -      1,856      504     3,583
1963         5,676    15.8     8,9140     504     -      3,483    2,213     3,748
1964         6,135    18.4    11,260    2,213     -      6,402    3,3h0     3,731
1965        14,2a14   11414    6,079    3,310     -      5,539      175     3,705
1966         5,2114   12.0     6,247      175    133     2,202      245     4,108
1967         5,812    12.6     7,320      245     35     2,256    1,008      4,336
1968         5,837     9.8     5,740    1,250    390     2,1415     500     4,465
1969         5,191    13.5     7,020      500      0     2,345    1,000     4,175
1970         3,384    12.5     4,230      n.a.   n.a.     n.a.     n.a.      n.a.
Source:  Secretariat of Agriculture;  USDA and mission estimates.



Table 7.7:   GRAIN SORGHUM PRODUCTION,
SUPPLY AND UTILIZAUTION, Br CROP MARKETING YEARS, 1959-1970
Year                  Yield per                                           Apparent
Beginning  Harves-ted Harvested   Production  Beginning  Exports  Ending  Domestic
April 1      Area       Hectare                Stocks             Stocks     Use
(1,000 ha.) (100 kg.)   (.............. 1,000 metric tons ...............)
1959         418        17.4          727       10         125    22         590
1960         364        16.5          609       22          60     7         564
1961         553         22.6       1,252        7         272    14        973
1962         646         21.6       1,394       14         447     6         955
1963         574        16.5          952        6         519    27         412
1964         724         17.5       1,267       27         651     9        634
1965         588        14.6          857        9         169    13        684
1966         844         25.2       2,130       13         946    13      1,184
1967         765         18.1       1,380       13         420    60         913
1968       1,083        17.5        1,897       60         809    81       1,067
1969       1,302        19.1        2,l484      81       1,425    65      1,075
1970       1,872        20.4       3,820        65       2,200 i 15o '    1,4351/
/ Estimates of Agricultural Attache, U.S. Embassy, Buenos Aires.
Source: 1959-1966: ERS-Foreign 216, ERS, USDA, Washington, 1968; and FRAD, ERS,
USDA, October 1969, unpublished data;
1967-1970: USDA, Buenos Aires, February 1971.
Note: Harvested area and production refer to crop harvested in the same calendar
year in which the marketing year begins.



Table 7.8:   CORN (MAIZE) PRODUCTION,
SUPPLY AND UTILIZATION, BY CROP MARKETING YEARS, 1959-1970
Yield per                                                          Apparent
Year   Harvested    Harvested   Produiction   Beginning Stocks         Exports         Domestic
Area       Hectare                  Jan. 1     Apr. 1   Jan/Dec    Apr/iar    Use 1/
(1,000 ha.)   (100 kg.)   (..................... 1,000 metric tons   .     .............)
1959     2,361        20.9       4,932         1,400       635    2,686     2,718     2,249
1960     2,415        17.0       4,1(8         1,397       381    2,670     2,083      2,300
1961     2,744        17.7       4,850           635       102    1,730     1,803     2,612
1962     2,757        18.9       5,220         1,143        76    2,931     2,870     2,5142
1963      2,645       16.5       4,360           890        76    2,447     2,540     1,913
19611    2,971        18.0       5,350           890       127    3,338     3,353     1,952
1965     3,062        16.8       5,140           950        50    2,802     2,718     2,128
1966     3,275        21.5       7,01h0        1,160        50    3,752     4,013      2,853
1967     3,450        24.7       0,510         1,595         75   4,317     4,140      3,729
1968     3,378        19.4       6,560          n.a.       182    2,893     3,448      3,185
1969     3,556        19.3       6,860          n.a.        109   3,971     3,790      3,119
1970     4,017        23.3       9,360          n.a.         60   5,500     5,70o      3,560S/
V   January-December use through 1967; April-March use during 1968-70.
/ Estimates by Agricultural Attache, U.S. Embassy, Buenos Aires.      Exports for 1970
include as much as 500,000 tons of corn harvested during 1970 which was exported
before April 1.
Source: 1959-1966: FRAD, ERS, USDA, October 1969, unpublished data; and ERS, IISDA, Supple-
ment for 1969 to Feed Statistics, S.B. 410, October 1969;
1967-1970: USDA, Buenos Aires, February 1971.
Note: Harvested area and production refer to crop harvested in the same calendar year
in which the marketing year begins.



Table 8.1: INDUSTRIAL PRODUCTION VOLUME INDEX, 1961-70
(Index 1960 = 100)
1961     1962     1963     1964      1965     T96      197      1968    1969   1st Qtr./7o 2nd Qtr./70
TOTAL                          109.7    104.7     99.9    115.0    129.6     129.1    129.1    139.3    149.4    144.5     160.4
Food, Beverages, Tobacco       105.1    112.4    115.2    108.6    117.2     125.8    132.5    138.3    146.2     144.5    ]44.9
Textiles, Leather, Clothing    102.0     82.8     79.6     96.9    111.3     105.1    104.1    113.1    115.8     101.2    218.2
Chemical Products              104.9    100.4    104.9    131.0    144.2     145.7    143.2    176.4    195.7     196.3    203.4
Stone, Glass, Pottery          116.5    111.8    100.2    111.5    131.9     140.9    144.8    156.5    165.3     174.4    ]95.2
Metals                         110.5    1D1.6    102.8    141.4    157.2     135.5    136.5    171.5    199.9     178.3    218.1
Motor Vehicles                 142.5    151.4    127.9    183.3     219.9    212.2    217.9    224.9    246.4     218.8    250.7
Non-Electrical Machinery        98.5     80.4     70.1     76.4     78.6      72.9     67.3     69.4     73.9      74.8     92.1
Electrical Machinery and
Equipment                    116.4     97.4     80.8     99.2    116.9     112.9    108.8    100.3    107.0     128.0    164.6
Others                         109.5    108.7    104.3    113.2    127.6     133.7    129.5    136.7    143.5     142.8    152.2
Source:  Ministry of Economy.



Table 8.2: MINERAL PRODUCTION, 1961-1969
_____1961    1962     1963     1964     1965     1966     1967     1968    1969
Coal
Gross Production (Mn. Tons)   4hO.O    285.7   250.7    423.9    54O.6    604.4    686.5    8o4.4    942.5
Commercial Production         233.1    182.2   160.8    272.5    288.1    330.4    h0h.8    L72.1    521.6
(Mn. Tons)
Petroleum (Mn. ml)           13,428.3 15,612.2 15,444.2 15,942.6 15,624.7 16,655.5 18,231.6 19,951.1 20,677.9
Tin (Tons)                      871     915      756    1,h42    2,244    2,485    3,988    3,250    3,575.o
Silver and Tin (Tons)           35L      482     513      324      414      305      256      584    1,117.0
Sulphur (Tons)               22,805   26,799   22,h96  22,310   29,126   30,453   32,479   34,223   34,515.0
Source:   Ministry of Economy.



Table 8.3: VOLUME OF MANUFACTURING PRODUCTION, 1961-69
1961      1962       1963      1964      1965       1966      1967      1968       1969
I. Food, Beverages, Tobacco
A. Food ('000 tons)
Meat Products                   2,145.1   2,378.8    2,605.3   2,019.2   1,995.1    2,320.9   2,522.0   *2,561.3   2,650.0
Edible Oil                        210.8     298.4      239.1     176.7     325.7      384.6     425.4     378.6      370.2
Wheat                           2,121.0   2,167.0    2,184.0   2,239.0    2,240.0   2,136.3   2,160.7    2,207.1   2,189.8
Sugar                             644.9     735.7      990.4     921.9   1,211.5      967.3     732.0     871.9      906.4
Cheese                            129.0     140.7      138.6     154.8     151.3      169.9     164.6      179.8     182.9
Lard/Butter                        53.4       50.0      50.7      50.3       42.3      45.6      41.5       39.0      34.8
Yerba Mate                        131.1     140.7      121.5     129.6      117.6     113.9     110.7      119.4     100.4
B. Beverages (Mil. 1)
Wine                            1,675.0   1,917.2    2,074.4   1,953.3   1,827.1    2,191.7   2,817.1    1,951.3   1,791.6
Beer                              24h.2     198.7      123.9     172.2     249.2      225.6     249.5     301.2      317.2
C. Tobacco (Mil. Packets)
Cigarettes                      1,153.3   i,164.4    1,189.2   1,253.2   1,247.2    1,206.6   1,239.2   1,302.2    1,363.2
II. Textiles, Leather, Clothing ('000 tons)                                                                        -
Wool (Washed)                         48.o       41.3      35.3      44.4       60.8      58.4      61.3       68.3      57.9
Cotton Yarn                           77.2      67.2       62.2      76.0       84.4      79.8      70.7       70.0      73-7
Combed Cotton                         10.2       10.6       8.8      13.1       14.4      14.5      13.1       13.4      14.4
III. Chemical Products
Quebracho Extract ('000 tons)        125.4     143.7      121.9     104.3      108.4     112.6     121.8      125.6     120.4
Industrial Oils    (    "    )       170.6     250.4      248.5     232.2     239.1      168.8     176.6     150.2       n.a.
Sulphuric Acid     (    "    )       127.2      117.6     108.6     150.7      161.6     149.2     154.1      159.3     183.6
Artificial Fibre   (    "    )        16.2       11.8       9.6      17.8       19.7      15.7      12.6       11.4      11.2
Synthetic Fibre    (    "    )         1.8        2.2       4.6       9.3       13.0      14.6      17.6       18.3      22.5
Oxygen             (Mil, m3)          -          -         -         -          28.8      28.8      28.7       31.8      44-7
Paint, Varnish     ('000 tons)        -          -         -         -          77.5      75.8      81.3       94.6     100.2
Plastic Products   (    "    )        -          -         -         -          20.1      23.6      20.4       24.2      27.0
Matches  (Mil. M)                      3h.8      40.0      40.5       37.2      36.1      37.9       39-.      4°05      43.6
Soap               ('000 tons)        -          -         -         -         237.5     225.7     214.1      201.0     203.5
IV. Stone Glass and Pottery ('000 tons)
Portland Cement                    2,876.4   2,920.5    2,494.6   2,878.1    3,272.4   3,450.9   3,520.3    4,175.2   4,306-3
White Cement                          29.8       28.0      24.3      34.5       31.8      32.6      31.1       36.o      n.a.



Table 8.2:  VOLUME OF MANUFACTURING PRODUCTION, 1961-69
Page 2
________________             ~~~~~1961  196      196?~    -I96b      197       1966     1967    f       19   16
V.    Metals
Cast Iron ('000 tons)            293.1     396.5     626.2     589.4    663.2     520.1     596.1     573.6     580.6
Crude Steel  "73.6                         659.0     912.8   1,267.q  1,368.4   1,265.6   1,327.6   1,555.7   1,696.5
Rolled Iron                      910.3     763.1     768.7   1,329.8  1,542.9   1,274.2   1,348.2   1,778.0   2,007.7
Gas Stoves ('000 units)           -         -        222.6     352.0    287.5     380.8     318.1     352.8     408.5
Heating Units ('000 units)        -         -         86.9     103.8    152.5     140.1     132.7     140.2     168.8
Iron Pipes ('D00 tons)            -         _         -        16.8      20.4      23.0      26.7      32.2      35.4
Galvanized Iron Pipes for
Electrical and Other Purposes   -         -         -         -       127.7     115.3     122.4     160.5     216.h
('000 tonE)
VI.   Motor Vehicles (Units)         136,188   129,880   104,899   166,683  194,536   179,453   175 1i8   180,976   218,590
Automobiles                   71,99    78-6n7     68,111   T 106,59  119;782  123,937   12        120,22    147,512
bara"s 6F281                            11,981     7,227    10,068   13,952     9,875     5,719     7,741     6,373
Pick-ups                      29,258    21,396   18,795     36,869   61,119    30,721    31,173    36,31    42,156
Jeeps                          3,297     1,615     1,365     1,238    1,352       943       652       780       441
lWagons                        2,152     2,028       959     2,517    1,496     1,438     1,207     2,386     3,576
Trucks, Buses                 23,206    16,195     8,462   13,262    16,835    12,539    12,180    13,656    18,536
VII.  Machinery (Non-Electrical)(Units)
Tractors                      14,716    11,762    11,427   13,105    13,568    11,266     9,538     9,833     9,003
Sewing Machines              16 0,300   97,600    58,800    72,600   83,600    66,100    58,500    62,000    65,6o0
VIII. Electrical Machinery and
Equioment { 000 units)
Industrial Machinery               7.5       2.)      0.8        2.0      1.8       1.6       1.        1.1       2.1
TV Sets                          202.3     118.2      76.8    129.2     179.7     158.8     156.6     168.0     181.2
Refrigerators                    259.0     162.5     157.1     187.0    226.6     197.9     196.9     223.1     223.6
WGashing Machines                108.0      80.7      73.8     109.0    117.3     126.3     122.8     163.6     151.5
Incandescent Lamps            36,991.0  36,158.0  30,113.0  61,788.0  56,215.0  59,562.0  53,863.O  56,732.0  51,331.0
Fluorescent Tubes              3,610.0   3,736.0   2,638.0   2,869.0   3,773.0  3,761.0   3,918.0   6,385.0   5,316.0
IX.   Others
A. Petroleum Derivatives ('030 m3)
Motonaftas                  3,189.1   3,705.5   3,511.3   3,736.6  6,293.8   6,635.2   4,650.3   4,672.8   5,219.7
Kerosene                    1,0o66l.6  1,288.1  1,078.9   1,202.64  1,106.5  1,065.2     976.1     967.6   1,022.6
Agricol                       192.9     191.6     136.6     148.L    123.9      89.8      93.6      -         -
Gas Oil                       877.0   1,267.16  1,685.6   1,636.0   2,296.4  2,846.6   2,976.7   3,172.9   3,319.8
Diesel Oil                  1,079.2   1,128.3   1,376.0  1,219.2   1,259.6   1,382.3   1,361.2   1,626.0   1,718.2



Table 8.3: VOLUME OF MANUFACTURING PRODUCTION, 1961-69
Page 3
-_____-9__1961-  _1962   1963      19-6      1965     1966      19T7  '      968   1969
I,.  Oth.ers
A. Petroleum Derivatives (cont.)
Fuel Oil                   7,163.1   7,391.3  6,860.9   7,451.4   8,411.4  8,622.4   8,431.2   8,023.5  7,712.7
Asphalt                      280.5     321.0    297.5     462.7     360.1    289.8     329.3     588.5     754.8
Lubricants                   156.9     146.9    122.9     144.1     156.2    147.3     130.7     142.3    145.5
B. Rubber ('000 tons)              -         -        -         -         55.7     49.4      48.7      47.7     61.6
C. Paper and Cartons (tons)
Cell3ulose Paste          89,216    87,442   99,289   122,921   150,636  154,269   115,132   148,007    16L,632
Paper for Blueorints      48,513    41,158    34,019   3L,543    49,521    58,281   47,840    55,011      525076
Other Paper for Printing  25,875    38,295   50,165    43,484    38,509    40,962   33,981    39,297     W!T,717
Typing Paper              12,051     9,233    7,256    13,649    17,755   14,686    11,964    14,268     13,887
Packing Paper             23,890    25,228   21,651    23,184    26,093   31,719    25,143    26,100     2b4,643
Kraf't Paper              45,441    42,051   43,222    68,926    79,833   83,801    73,876    90,623    102,9914
Corrugated Paper          41,515    40,131   39,599    59,830    76,673    74,559   66,401    79,588     914,115
Chemiical Paper           26,422    20,516   24,680    3o0o96    32,046    35,641   28,462    30,913     32,141
Hiygenic Paper            12,399    17,995   13,778    19,477    23,o68   18,798    21,694    24,551     31,317
Other Paper               19,490    16,985   16,798    13,744    16,671   17,067    15,936    16,645     17,779
Cartons                   85,265    79,441   66,268    98,816   116,511   106,719   99,381   104,539     128,40'7
Cardboard                 32,135    33,960   23,852    38,973    46,751    43,759    43,803   46,311     19,263
Source: Ministry of Economy.






Table 9.1: PRINCIPAL PRICE INCATDRS
January 1967 - 100
Wholesale P-rice Index                       Goat of Livirg                Exchane Rate
Non-Agri culture                                                  Nominal   Nominal
Agri-                          Im-                                     Nomi-    Whole-     Cost of
Total    culture    Total   National   ported      Total     Food    clothing     nal     sale       LI ivin
(Ptafl.I   (T.,afl
January  1967              100.0     100.0     100.0     100.0     100.0      100.0     100.0     100.0      282.2     282.2     282.2
Februwry                   101.2      99.6     102.0     102.0     101.0      102.1     102.7     101.8      295.8     292.3     317.4
March                       103.2     97.3     io5.5     104.8     118.1      104.4     103.2     104.8       350.0    339.1     335.2
April.                      105.4      98.2    108.2     107.3     124.6      105.7     105.0     108.1       350.0    332.1     331.1
May                         108.8    104.3     110.5     109.5     128.0      106.7     104.8     110.6       350.0    321.0     328.0
June                       112.4     in.1.0    113.0     112.0     130.3      111.3     111.4     114.2       350.0    31-1.4    314.5
July                       115.1     117.4     11.1      113.2     130.9      116.9     120.6     115.0      350.C     304.1     299.4
August                      1-17.8    121.?    116.2     115.4     130.9     2117.3     120.5     1-17.0      350.0     297.1    298.4
Sepytember                 119.0     122.9     117.5     116.8     130.7      117.8     120.2     118.2      350.0     294.1     297.1
October                     121.5    124.2     120.6     120.0     131.2      121.2     125.7     1.19.3      350.0     288.1    288.8
November                    121.4    124.3     120.2     119.7     130.0      1.24.0    128.4     120.1       350.0    288.3     282.3
becember                    119.3    121.2    3118.6     118.0     129.9      133.6     145.4     120.5       350.0     293.4    262.0
Average 1967              1fl9     111.7     112.0     111.5     123.       113.4     115.7     1-12.5      339.8    302.6     303.0
January 1968               120.9     120.5     121.0     120.6     128.5      129.0     13.1      120.9       350.0    289.5     271.3
February                    121.1    119.8     121.6     121.2     129.2      130.3     135.2     121.5       350.0    289.0     268.6
March                       120.3    117.4     121.5     121.0     129.3      129.4     132.1     122.2       350,0    290.9     270.5
April                       120.1    118.0     120.9     120.4     129.5      128.9     132.0     124.4       350.0     291.4    271.5
May                         120.7    119.1     121.3     120.8     129.5      129.1     131.3     126.3       350.0     290.0.   270.4
June                       122.8     124.0     122.3     121.9     130.3      129.5     130.9     128.8       350.0    285.0     270.3
July                       123.1     123.0     123.2     122.7     131.4      129.4     129.8     130.3       350.0    284.3     270.5
August                      124.1    124.9     123.8     123.3     132.1      129.6     129.2     131.2       350.0    282.0     270.1
September                   124.9    126.6     124.2     123.6     134.3      131.4     130.9     132.7       350.0    280.2     266.4
Octobwr                     124.5    125.6     124.1     123.4     135.5      134.0     134.8     134.2       350.0     281.1    261.2
Ijovembar                  123.2     120.3     124.3     123.6     135.9      134.4     133.0     135.5       350.0    284.1     261.1
Decembr124.0                         123.4     124.3     123.6     136.5      146.4     154.2     136.6       350.0    282.3     238.7
Avwrage 1968              122.?    122.8     122.7     122.2     131.8      131.8     134.0     128.7       350.0     285.8    265.9
January 1969               124.5     122.9     125.2     124.4     137.5      139.6     141.3     136.9      350.0     281.1     250.7
February                   124.5     121.2     125.8     125.0     139.1      137.8     137.8     137.4      350.0     282.0     254.0
March                       124.1    119.4     125.9     125.1     140.7      139.3     139.2     138.0       350.0     281.3    251.3
April.                      124.4    119.6     126.3     125.4     143.3      139.5     140.7     139.2       350.0     281.3    250.9
may                        129.3     133.2     127.9     126.9     144.8      137.5     136.1     140.9       350.0    270.7     254.5
June                        131.6    137.1     129.5     128.6     145.3      138.9     137.7     142.3      350.0     266.0     252.0
July                        132.7    139.8     128.1     129.1     145.6      140.7     140.4     143.3      350.0     263.8     248.8
August                     135.7     148.o     129.0     129.9     146.6      139.7     138.0     144.2       350.0    257.9     247.1
September                  137.6     154.0     129.4     130.3     148.4      142.3     14.1.8   1.44.9      350.0     254.4     246.0
October                     135.4    143.3     130.5     131.3     150.8      144.5     146.0     146.1       350.0    258.5     240.5
November                   135.3     142.1     130.8     131.5     154.6      145.5     14. 8     146.5       350.0    258.7     240.5
December                   133.5     135.9     130.7     131.3     155.8      156.2     164.0     146.7       350.0    262.2     224.0
Average 1969             130.7     134.5     128.3     128.2     146.0      141.8     142.1    lit2.2      350.0     268.2     246.7
January 1970               135.5     143.9     13L.1     132.8     157.0      148.9     1.48.8    146.9       350.0     258.3    235.0
February                    134.8    137.6     133.7     134.7     158.7       150.9                          350.0     259.6     231.9
March                       135.8    136.2     133.9     1.35.5    159.2       152.9                          350.0     257.7     228.9
April                      1.38.4    141.4     136.6     137.3     161.1       154.1                          350.0     252.9     227.1
May                         1439     156.5     142.3     1.39.4    161.3       155.2                          357.      243.2     225,5
June                       I44.6     153.7     143.0     141,5     161.8       156.3                          3714.0    2586      239,3
July                       146.4     153.0     11A4.S    143.1     172.5       158.2                          400.0     273.2     252.8
August                      151.7    164.2     149.7     146.9     176.8       159.9                         -400.0.    263.7     250.2
September                  156.5     172.0     154.5     150.5     181.2       163.1                         'Loo.c     255.6     245.2
October                     163.2    178.1     161.4     157.9     183.2       169.6                          400.0     245.1     235.8
November                             182.2     163.8     160.3     183.5       174.0                          400.0               229.9
December                                                                       190o.1                         100.0               210.4
Average 1970                                                                 161.1                          37 7               23.0_-
Source: Ministry of Econorny.



Table 9.2: WAGES, MANUFACTURING INDUSTRY AND COMMERCE, 1960-70
(Index, 1960 = 100)
Manufacturing Industrp_                              CommerceZ2
Percent Change,                       Percent
Nominal               Real              Real Wa&es                           Change,
Single   Married    Single   Married/     Single   Married    Nominal   Real      Real
Wages
1960           100.0    100.0       100.0   100.0          -        -         100.0   100.0       -
1961           123.4    123.5       108.5   108.7         8.5      8.7        123.6   108.7      8.7
1962           154.1    156.0       105.8   107.1        -2.5     -1.5        144.2    98.9     -9.0
1963           187.9    ion .       10410   105.3        -1.7     -1.7        169.0    93.5     -5.5
1964           244.6    268.6       110.8   121.7         6.5     15.6        254.5   115.3     23.3
1965           322.6    385.1       113.7   135.7         2.6     11.5        341.8   120.4      4.4
1966           439.8    521.1       117.3   139.2         3.2      2.6        b58.7   122.0      1.3
1967           569.5    639.8       118.6   132.9         1.1     -4.5        572.4   118.7     -2.7
1968           631.6    723.3       112.5   128.8        -5.1     -3.1        633.6   112.8     -5.0
1969           695.1    845.1       114.9   139.7         2.1      8.5        699.6   115.7      2.6
1970           821.9    976.2       119.9   143.3         4.4      2.6        840.0    122.7     6.1
/a Based on collective bargaining contracts.  Data on actual wages paid are not available; the data
probably understate the wage increases in 1968 and 1969 since many employers paid wages in excess
of the legally required wages; moreover, average number of hours worked probably increased
somewhat.
/b Including family allowances and other benefits; based on married workers with two children.
L   Administrative and sales personnel on fixed salary.
Source:  Direccion Nacional de Coyuntura.



Table 9.3: WAGES, SELECTED OCCUPATIONS, 1968-70--
(for each occupation, 1967 = 100)
Relative
Nominal                          Real                   Wage
Occupation-                             1968     1969     1970          1968     1969     1970      Level, 19702/
Cafeteria assistant                      106      125      138            91      100       97           120
Quality inspector                        122      138      140           105      110       99           139
Key punch operator                       112      122      143            97       98      100           100
Principal employee                       104      125      143            90      100      101           153
Commercial artist                        107      111      147            92       89      103           171
Checker                                  112      135      148            97      108      104           115
Nurse                                    116      126       148          100      101      104           141
Unskilled employee                       113      142      149            97      113      105           100
Telephone operator                       116      134      150           100      107      106           107
Intermediate employee                    110      159      155            95      127      109           128
Purchasing assistant                     1014     151      163            90      121      115           166
Specialized employee                     109      141       164           94      113      115           206
Bilingual stenographer                   130      149      164           94       113      115           113
Executive secretary                      105      143       170           91      115      120           358
Junior I.B.M. operator                   124      157      175           107      125      123           154
Programmer                               136      153      179           117      122      126           273
Bilingual secretary                      131      168      184           112      135      129           244
Senior I.B.M. operator                   122      153      190           105      122      134           220
Production analyst                       136      158      197           117      136      169           197
a/ Excludes overtime pay.
b/ Ranked in ascending order of real wage index in 1970.
c/ Money wage relative to wage of unskilled employee.
Source:  Survey conducted in December 1970 by association of eight major firms in Buenos Aires.



Table 9.4: EVOLUTION OF AGRICULTURAL AND NON-AGRICULTURAL PRICES, 1939-692--
(1939=100)
Agricultural Prices          Crop Prices            Livestock Prices
Non-agricultural Prices Non-agricultural Prices Non-agricultural Prices
1939               100                      100                       100
1940-h4             69                       60                        82
1915                86                       91                        87
1950-54             75                       69                        87
1955-59             84                        83                       85
1960-64             99                        97                      100
1965                92                        78                      113
1966                86                        79                       97
1967                82                        87                       95
1968                82                       79                        93
1969                85                       i7                        89
1/ Based on wholesale price indices.
Source: National Statistics and Census Office.