Argentina's Alfonsin wants to tackle debt, but he's not sure how
Economic planners for President-elect Raul Alfonsin say they are shocked by what they are learning about the precarious state of the Argentine economy. ''Things are worse than we imagined,'' says one economist doing some advance work for the civilian government that takes office Dec. 12.Skip to next paragraph
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Dr. Alfonsin spoke frequently during his campaign about the nation's poor economic condition, but an associate said, ''He was saying the obvious, something that everyone here knows.
''What none of us realized was the full extent of the debt problem. We now know we must pay $20 billion in 1984 - and there is no way we can come up with anything near that sum.''
Part of the debt problem, these sources indicate, has been the faulty accounting procedures of the Argentine central bank. These problematical procedures led Economy Minister Jorge Wehbe to alter his tally on the size of the foreign debt three times in one week. The first and last tally were $5 billion apart - and at the end of week Mr. Wehbe was not sure the final figure was correct.
Alfonsin advisers say they, too, are uncertain about the size of the debt. ''It could be more or less'' than the $40 billion figure that is usually cited, an adviser says. Some think it is more like $50 billion.
They are more sure, however, that $20 billion is due in 1984 - ''the year of the crunch,'' as they are calling it.
Of that figure, $14 billion is principal, $4 billion is interest, and $2 billion is a carryover from calendar year 1983.
''It is simply unpayable,'' says a current central bank official. Alfonsin economic planners agree with this.
Yet Alfonsin promised his government would honor the debt.
What to do? ''Renegotiate - and fast,'' says one of the planners, who wishes to remain anonymous in this period before Alfonsin names his cabinet.
The irony here is that Alfonsin until the final days of his campaign held out scant hope of victory and had not spent a lot of time working up an economic plan.
But a plan appears to be emerging. It involves renegotiation of the debt and an emergency plan that may include fiscal and monetary controls.
There is no clear-cut renegotiation strategy yet. It is too early even to estimate how much of the $20 billion due next year can be paid. One source suggests the figure may be as low as $5 billion. If it is that low, only interest and perhaps half of the 1983 amount could be paid.
The economists recognize that Argentina does not have a good reputation on the international financial scene. ''We need to restore confidence in what most foreign bankers would call a potentially prosperous nation.''
Some Alfonsin associates are not very optimistic that headway can be made quickly, however. Some forecast a number of lean years ahead for Argentina.
The debt issue, however, is central in all their thinking. ''It must be faced and faced immediately,'' says one.
And if the debt is No. 1 on the Alfonsin agenda, inflation is No. 2. Inflation is expected to average out at 500 percent in 1983, although at the moment it is raging at close to 950 percent. To bring it down, Alfonsin's advisers are considering:
* A ''sliding control'' on prices - allowing monthly increases in the range of 10 percent beginning early next year. The rate of price hikes would be reduced to about 5 percent by the end of 1984. That would allow for price increases in the range of 70 to 80 percent for the year.
* Similar controls on wages, but with some flexibility to take care of some of the inequalities in the current wage and salary structure. Much more study, it is believed, needs to be put to this effort.
* An increase of between 40 and 50 percent in the value of exports - particularly grains and beef, together with new and stiff regulations against imports. This plan would give tax incentives and other benefits to exporters. It is hoped it would net between $4 billion and $4.5 billion.
* Austerity budgets for just about everything the government does, except in education and public health. The military budget would be reduced sharply, although Alfonsin associates say they will have to be careful not to provoke the military.