Argentina gears up for IMF mission as new figures point to continuing recession

BUENOS AIRES, Argentina (AP) _ As Argentina's government prepared to lobby the International Monetary Fund for more aid Monday, a business group released fresh figures suggesting the economy remains

Monday, April 1st 2002, 12:00 am

By: News On 6

BUENOS AIRES, Argentina (AP) _ As Argentina's government prepared to lobby the International Monetary Fund for more aid Monday, a business group released fresh figures suggesting the economy remains rooted in its four-year recession.

A survey of 479 businesses showed that sales of a wide range of consumer goods including electronics, furniture and jewelry were about half as high this March as in March 2001, according to CAME, a group representing small and medium-sized businesses.

The results, released Sunday, came as bad news on the eve of a two two-week mission by IMF representatives who are expected to clarifying what Argentina needs to do to receive further aid from the international lending agency.

The government of President Eduardo Duhalde, who took over in January after Fernando de la Rua was brought down by protests over the country's economic chaos, is hammering out measures aimed at steadying the peso and keeping the budget deficit down _ a key IMF demand.

Under pressure from citizens still waiting for improvement, Duhalde recently predicted the economy would turn around this year, and Cabinet chief Jorge Capitanich repeated that on Sunday, saying Argentina would ``emerge from the depression'' in the second half of the year.

The sales figures suggested that no turnaround was evident in March.

CAME blamed the decline in sales on a number of negative factors, including the currency instability induced by the recent devaluation of the peso, the partial freeze on bank accounts, rising prices and the lack of economic confidence.

Meanwhile, consumer groups released figures showing that despite the falling demand, prices of basic goods rose sharply in March.

A survey by the Buenos Aires-based DEUCO organization showed that the cost of a basket of basic consumer goods had risen by around 15 percent, with the prices of cooking oil, medicine, meat and flour up 20 to 30 percent.

March's official inflation rate, however, is likely to be well below 15 percent, in part because of an agreement between the government and the privatized utilities sector not to increase rates for the time being.

Despite the spiraling costs and the weakened peso, which has dropped to three to the dollar since the government ended its one-to-one peg with the U.S. currency in January, Deputy Economy Minister Jorge Todesca said Sunday the country was not in risk of experiencing hyperinflation.

Argentina is seeking $25 billion in bailout funds to prop up the country's failing banking system and put the country on the road to recovery. IMF officials have said Argentina must undertake more economic reforms and present a clear plan before aid can be released.