[SANITIZED]LATIN AMERICAN TRENDS: STAFF NOTES JUNE 16, 1976 - 1976/06/16

• Document Type: SPECIALCOLLECTION
• Collection: Argentina Declassification Project - The "Dirty War" (1976-83)
• Document Number (FOIA) /ESDN (CREST): 06628137
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 7
• Document Creation Date: April 3, 2019
• Document Release Date: April 12, 2019
• Publication Date: June 16, 1976

Approved for Release: 2018/10/02 C06628137
Latin American Trends
,
ES
Efertet
151
CI SNLA 76-024
No. 0704-76
June 16, 1976
Approved for Release: 2018/10/02 C06628137
3.5(c)
Approved for Release: 2018/10/02 C06628137
SE CR(
LATIN AMERICAN TRENDS
This publication is prepared forregional speclalists in the Washington com-
munity by the Western Hemisphere Division, Office of Current Intelligence,
with occasional contributions from other offices within the Directorate of
Intelligence. Comments and queries are welcome. They should be directed to
the authors of the individual articles.
CONTENTS'
June 16, 1976
Argentina: Military Government Scores
Initial Economic Gains
Argentina: Church Leaders on Military
Junta
10
13
NOTE: Beginning next week, the.Latin American Trends
will be published twice a weekt Issues will be dated
�
Monday and Wednesday, and will be distributed the
following day.
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3.5(c)
Argentina: Military Government Scores Initial �
Economic Gains
In the two months since taking power, the
Argentine military government gas been able to slow
runaway inflation, reduce the budget deficit, and
stave off default on the foreign debt. These short-
term successes enhance prospects for dealing with
the more deepseated problems of reviving production
and exports and restoring Argentina's international
solvency. Progress so far will probably encourage
foreign leaders to furnish badly needed credits.
It should also reassure labor, whose support is es-
sential to the regime's ultimate success.
Recent Financial Improvements
After falling slightly in April, the monthly
inflation rate dipped to 13 percent in May compared
with the 38 percent March figure. The government
trimmed budget expenditures 6 percent in April while
doubling revenue collections, thereby cutting the
deficit by nearly 30 percent. As a result, the
growth of the money supply in April was little more
than half the February rate.
Progress against inflation has permitted the
government to relax its wage freeze to the point
where real wages can be maintained. A 15-percent
wage hike effective June 1 reinstated the May real
wage level; real wages, which had reached an econom-
ically unsustainable level at the beginning of 1976,
dropped 45 percent from January:through April.
The government nevertheless realizes it cannot
stabilize prices immediately. It is indexing private
bank deposits and loans to reduce speculation and
encourage savings and investment. Taxes also are
indexed to encourage prompt payment.
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SEC
June 16, 1976
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Production Still Low
The government had hoped that earlier measures--
freeing prices while freezing wages--would lead to
higher profits, thereby stimulating output and in-
vestment. With real wages dropping, however, sales
have declined and producers have cut output. Auto
makers in particular have reduced production and
furloughed workers because of excessive stocks. If
real wages can be kept at current levels, demand
should stabilize, laying the groundwork for some
expansion in output later in the year. The funda-
mental solution to Argentina's economic problem rests
on the ability to channel an increasing portion of
production quickly into export markets.
Foreign Payments Position Slightly Better
We expect exports to increase 10 percent this
year. Exchange rate adjustments will help boost
sales of meat and manufactures-as foreign markets
rebound from recession. Buenos Aires is likely to
use the increased earnings to expand imports of raw
materials needed to support higher industrial pro-
duction. The trade account thus will be approximate-
ly in balance as in 1975. Continuing high interest
payments will keep the current account deficit at
last year's $700 million level..
The government still needs to raise $400-$500
million to close its $1.6 billion financial gap--
the current account deficit plus scheduled debt
repayments. The Peron government had received $600
million in commitments, and the junta has obtained
debt relief from private banks amounting to some
$250 million this year. In addition, since the coup,
foreign lenders have provided $250-$300 million in
new loans. To raise the remaining funds, Buenos
Aires intends to appeal to the IMF as well as to
private banks and will request an IMF standby loan
if necessary.
June 16, 1976
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Argentina: International Financial Gap
MillionUS$
1973
1974
19751
19762
Exports (f.o.b.)
3,266
4,005
3,000
3,400
Imports (f.o.b.)
1,983
3,159
3,000
3,400
Dade balance
1.283
846
"et,
.e..
Net services and transfers
-568
-600
-700
-700
(Wren: account balance
715
246
-700
-700
Debt amortization
-573
-600
-800
-900
Financial gap
142
,4 -354
-1,500
-1,600
Medium- and long-term capital Inflows
594
' 723
N.A.
N.A.
Net short-term capital inflows
185
-420
N.A.
N.A.
Total capital inflows
779
303
789
N.A.
Change in reserves
921
-Si
-711
����
Other financial items:
External debt yearend
2,864
2,567
2,556
3,056
Foreign reserves yearend
1,462
1,411
700
700
I. Provisional.
2. Projected.
Efforts to attract foreign investment do not
appear to have had much success so far. The mili-
tary government has(a) promised to change the
restricti.ve foreign investment law which has in ef-
fect halted the inflow of foreign funds, (b) sus-
pended nationalization actions against several
foreign--including US--firms, and (c) specifically
solicited foreign investment inpoil exploration and
exploitation. ForeigniinvestorVare taking a wait-
and-see attitude beforOcommitiing funds.
3.5(c)
June 16, 1976
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3.5(c)
Argentina: Church Leaders on Military Junta
Leading churchmen have voiced general, if not
effusive, support for the military junta. Seventy
of Argentina's bishops have issued a pastoral letter
that clearly indicates a desire to cooperate with
the government. The document raises such problem
areas as economic hardships and abuses of human
rights, but only with great caution, carefully avoid-
ing outward criticism of the junta's derformance.
The statement was the product of last month's
episcopal conference, headed by the archbishop of
Cordoba, Cardinal Raul Francisco Primatesta. The
Cardinal reportedly drafted the final, bland state-
ment as a compromise, after some participants sought
to make the paper a purely seiritual tract and others
tried to deal at length with political and social
topics.
The pastoral letter skirts any particular
policy line but refers to areas of concern to the
"nation" and the "people." The statement is charac-
terized by what the US embassy calls an "on the one
hand...., but on the other" approach. Typical is
the statement that individuals and families must not
be "absorbed" by the state, but neither must the
state remain a "mere spectator to chaos and immoral-
ity."
The bishops temporized at some length on the
basic question of how much loss of personal freedom
and economic deprivation can be justified during the
effort to restore political and fiscal order. Com-
mon good and human rights are permanent and inalien-
able, they said, and no emergency authorizes ignoring
these rights. But the manner of treating these
questions varies with place and time. In the present
"disastrous situation" in Argentina, the letter
notes, it is not reasonable to expect full enjoyment
of common good or of rights to the same degree as in
time of abundance and peace.
June 16, 1976
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The statement clearly leaves room for the bis-
hops to back away gracefully from the junta should
human rights or other policies prove troublesome for
the churchmen. In the meantime, however, the clerics
seek to identify, however cautiously, with the new
government before its success or failure is clear.
June 16, 1976
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