Argentina to Cut Use of Reserves for Debt in 2013, Lawmaker Says

Argentina’s declining debt obligations will allow the government to tap fewer central bank reserves in 2013 than the $5.7 billion planned this year, said Fernando Yarade, deputy chairman of the Finance Committee in the lower house.

South America’s second-biggest economy faces about $9 billion in debt payments next year, compared with about $11 billion in 2012, Yarade, a member of the ruling Victory Front coalition, said in a telephone interview today. Yarade said he had access to an advanced report of the 2013 budget bill, which must be sent to Congress by tomorrow night.

“The policy to keep cutting the country’s debt will continue,” Yarade said. “It’s very probable that there will be an additional inflow of about $10 billion in export revenue this year that will boost central bank reserves.”

President Cristina Fernandez de Kirchner has tapped central bank reserves to pay debt since 2010 as Argentina remains blocked from international credit markets following its default on $95 billion of bonds in late 2001. Reserves fell to $45.3 billion yesterday, down from $47.8 billion on April 27 and a record $52.6 billion in January last year.

Officials at the central bank’s and the Economy Ministry’s press offices declined to comment on the budget proposal.

The central bank transfered about $6.6 billion from its savings to the treasury to make payments in 2010, $7.5 billion in 2011 and is scheduled to send $5.7 billion in 2012. Economy Minister Hernan Lorenzino will discuss the budget with lawmakers on Sept. 20, Yarade said.

Growth Forecast

The 2013 budget proposal forecasts economic expansion of 4.6 percent, more than double the 2.2 percent growth that the World Bank predicted for Argentina in 2012. A rebound of the Brazilian economy, the country’s main trade partner, and rising activity in China, Europe and the U.S. will help improve demand for Argentine goods, Yarade said.

“The economy will have better international conditions than this year and that will have a positive impact,” Yarade said. “The outlook is good taking in mind that the price of soybeans, wheat and corn are higher and that a better harvest is expected.”

Argentina is the world’s biggest exporter of soybean oil and the second biggest of corn. It ranks third in shipments of soybeans and fifth in wheat.

To contact the reporter on this story: Eliana Raszewski in Buenos Aires at eraszewski@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

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