Buenos Aires, Argentina
September 5, 2000

Dear Mr. Köhler:

The attached policy memorandum and annexes update the information contained in our letter of February 14, 2000, and describe the economic policies and objectives of the Government of Argentina for the period 2000–02, supported by the stand-by arrangement from the Fund in an amount equivalent to SDR 5,398.61 million approved on March 10, 2000. The Government believes that these policies will promote sustainable growth of output and employment in conditions of low inflation and external viability, will improve efficiency in the economy in general and in the public sector in particular, and will help address priority social needs.

During the period of the arrangement, the authorities of Argentina will maintain the customary close relations with the Fund and will consult with the Fund in accordance with the Fund’s practices on such consultations. It is expected that a review of the program will be carried out with the Fund before February 28, 2001.

Sincerely,

Mr. Horst Köhler
Managing Director
International Monetary Fund
Washington, D.C. 20431

Attachments:
Memorandum of Economic Policies
Technical Memorandum of Understanding

Memorandum of Economic Policies

I.  Background

1.   The economic program of the Argentine government—which is supported by the International Monetary Fund (henceforth the Fund) with a three-year Stand-By Arrangement (SBA) approved by the Executive Board of the Fund on March 10, 2000—aims at creating the conditions for sustained growth of output and employment with price stability, through an increase in national savings and investment, and through continued improvement in the competitiveness of the economy.

2.   The main pillars of this program are a progressive reduction of the consolidated public sector deficit (including the provinces) from the relatively high level (4.1 percent of GDP) reached in 1999 to under 3 percent of GDP in 2000, with further reductions in subsequent years, to reach equilibrium by 2003, in line with the requirements of the fiscal responsibility law; and a wide-ranging structural reform effort to strengthen the tax administration; improve the management of public spending; make the social security system more equitable, and ensure its long term financial solvency; increase efficiency in the health system; continue strengthening the domestic financial system; modernize the labor legislation, with a view to promoting job creation; and increase competition and efficiency in key sectors of the economy.

3.   These policies were outlined in the Memorandum of Economic Policies (MEP) attached to the letter of the Minister of the Economy and the President of the Central Bank of Argentina (BCRA), dated February 14, 2000, requesting the support of the Fund under the SBA. The present MEP reviews the progress to date in implementing these policies, against the background of developments in the economy during the first half of this year, and outlines policies and prospects for the second half.

II.  Economic Performance in the First Half of 2000

4.   During the first half of 2000, the Argentine economy continued to recover from the 1999 recession, but at a more gradual pace than anticipated. Available data show that, after declining by 3.1 percent on average in 1999, real GDP rose by about 1.2 percent during the first half of 2000, compared with the same period of 1999. Economic growth remained subdued due to weak domestic demand, especially in the construction sector, and some renewed volatility in external financial markets. As a result , the rate of unemployment increased to 15.4 percent of the labor force in May 2000, from 14.5 percent in May 1999. Preliminary estimates indicate that the pick up in economic activity has gathered strength during the third quarter of this year.

5.   The economy has continued to adjust to the external shocks it suffered in recent years through declining domestic costs and prices. Unit labor costs continue to fall, boosting the competitiveness of Argentine industry. Consumer prices declined by 0.9 percent year-on-year by July 2000, while wholesale prices increased by 4.1 percent over the same period, pointing to an increase in the relative price of tradable goods. By end-June 2000, the real effective exchange rate (CPI-weighted) stood 1.7 percent below its level a year earlier.

6.   Reflecting the improvement in competitiveness, as well as the weakness of domestic demand, the external trade balance strengthened substantially, shifting from a deficit of US$397 million in the first half of 1999 to a surplus of US$896 million in the first half of 2000. Exports rose by over 13 percent in value terms over the same period, boosted not only by higher prices, particularly in the oil and gas sectors, but also by a strong performance in volumes of manufacturing exports. In contrast, imports increased by less than 2 percent in value during the same period. Despite some deterioration in the balance on factor services, the external current account deficit is estimated to have narrowed from US$5.5 billion in the first half of 1999 to US$4.6 billion in the corresponding period of 2000. A large share of this deficit was financed by foreign direct investment (FDI). At end-August, the gross international reserves of the Central Bank amounted to US$25 billion, exceeding its monetary liabilities, and, in addition, the commercial banks held liquid assets abroad amounting to US$6.8 billion.

7.   The slower than projected recovery of domestic demand and the decline in consumer prices led to a shortfall in tax revenues vis-à-vis the program of Arg$600 million during the first five months of 2000. To ensure that the announced fiscal targets would be met, the government, together with modifying the schedule for payments of the income tax (a measure estimated to yield about Arg$320 million additional revenues for the year), announced an important package of spending cuts (estimated to save about Arg$600 million on an annual basis), including a 12–15 percent cut in salaries of civil servants earning more than Arg$1,000 per month, the restructuring of some public entities, and a rationalization of certain privileged pension benefits. These measures, along with higher nontax revenue than envisaged in the original program, and a high rate of participation in the tax amnesty announced earlier in the year, made it possible to ensure compliance with the end-June ceiling on the overall deficit of the federal government. The end-June cumulative ceilings on the primary expenditure of the Federal Government, and on the change in its total debt were also met.

8.   Preliminary information on developments in the provinces’ finances so far this year, suggest that—despite the adverse impact of the slower than projected growth of the tax base on the provinces’ own revenues, and some carryover to 2000 of expenditures committed in late 1999—the provincial deficit is declining substantially. This reflects significant efforts to contain spending and increased transfers from the federal government, as agreed under the Federal Pact in December 1999. Primary expenditures are estimated to have declined by 10 percent in the first half of 2000, in comparison with the corresponding period of 1999. The federal government is supporting fiscal and structural adjustment programs in the nine most indebted provinces by using the trust fund for provincial development to refinance outstanding debts of these provinces at more sustainable terms, against the guarantee of the provinces’ revenue shares. The government is also working with the World Bank and the IDB to support the adjustment efforts of the larger provinces.

9.   The banking system has maintained the sound conditions achieved in recent years. Bank deposits grew by about 6 percent during the first half of 2000. The banks’ lending however, has not increased, and their holdings of liquid assets continue to be well in excess of the mandatory liquidity requirements. Their liquidity cover is further buttressed by the existence of the private contingency repo line with international banks amounting to US$6.9 billion. The incipient economic recovery has not yet been reflected in the quality of banks’ assets, and nonperforming loans have increased somewhat further; net of provisions, however, they declined from 4.7 percent of total assets in December 1999 to 4.1 percent in June 2000. The banking system remains well capitalized, with the capital adequacy ratio (Basle criteria) slightly exceeding 20 percent in June 2000. The end-June ceiling on the net domestic assets of the Central Bank was observed.

10.   Important progress has been made in a number of structural reform areas. An especially important achievement in this respect was the approval by Congress of the labor reform in May. This law lengthens the probation period for newly-recruited workers from one to three months (six months by agreement); provides for the gradual elimination of the ultractividad clause that currently extends expired labor contracts indefinitely, until modified by mutual agreement; and stipulates the predominance of collective agreements at the enterprise level over sectoral ones. The law aims to promote a better adaptation of the labor market to changing patterns of demand and production, and reduce informality and precariousness in employment.

11.   Significant progress has also been made in structural fiscal reforms. As indicated in the previous MEP, the government presented to Congress early in the year a comprehensive law to strengthen tax enforcement and reduce evasion. While this law is being considered by Congress, the government enacted by decree some of its key provisions, notably that requiring payments larger than Arg$10,000 to be made through bank instruments, rather in cash. In addition, the government (a) is modifying the tax regime for petroleum products, and is taking steps to reduce evasion in the wheat, meat, and tobacco industries; (b) is continuing to strengthen the operational capabilities of the tax and customs administration; and (c) has secured congressional approval of legislation to speed up the judicial treatment of tax cases, including through the establishment of a specialized branch of the judiciary to deal with such cases, and of special national and regional secretariats within the court system to handle the collection of tax arrears.

12.   The government has submitted a social security reform bill to Congress aimed at improving the intertemporal solvency of the system and broadening its coverage. This reform entails awarding a pension to senior citizens of more than 70 years of age who do not have other sources of income, the redefinition of the universal pension allowance (PBU), and a progressive benefit schedule for women who retire at 60-65 years of age. Additionally, the government intends to take steps to align more closely the contributive base for the self employed to their actual income, to reform over the medium term the special pension regimes for selected categories of public employees, and to strengthen the regulatory framework for the private pension plans to increase competition and reduce operating costs.

13.   The government is also reforming the health care system, with a view to increasing solidarity and improving efficiency. In June, the government issued a decree promoting the consolidation of existing union-run health organizations (obras sociales) and fostering more effective competition among the remaining ones, and between them and the private HMOs, effective January 1, 2001. Under the new system, all health care providers will offer basic coverage, and contributions to the Solidarity Fund (which will subsidize provision of benefits for the poor and for catastrophic illness) will be generalized, based on individual income levels. The government is also implementing its program aimed at ensuring the financial viability of the health system for retirees (PAMI), while improving the quality and cost effectiveness of its services. Since the beginning of this year, contracts with suppliers have been renegotiated; its arrears have been significantly reduced; unnecessary intermediation has been eliminated; and non-tenured personnel has been significantly cut back. To further promote transparency, the government will re-incorporate the operations of PAMI into the federal budget in 2001.

III.  Policies and Prospects for the Second Half of 2000

A.  Macroeconomic Policies and Prospects

14.   The government is fully committed to sustaining its fiscal consolidation efforts in the rest of this year and beyond, so as to strengthen confidence in domestic and external financial markets, which in turn is a needed condition for a renewed decline in interest rates and a sustainable acceleration in economic growth. However, it recognizes that, notwithstanding the substantial expenditure cuts that have already been implemented, the impact on government revenues of the slower than expected recovery of economic activity cannot be fully offset without risking to abort the incipient recovery. The government is, therefore proposing a modification of the program allowing a slightly larger (about 0.2 percent of GDP) federal deficit than originally planned. At the same time the program’s ceiling on noninterest expenditure would be lowered by the equivalent of 0.1 percent of GDP, to reflect the government’s expenditure containment efforts. These proposed modifications will continue to be consistent with the fiscal responsibility law.

15.   The federal deficit for 2000 will now be limited to Arg$5,300 million (1.8 percent of GDP). Observance of this target will be permitted by a projected modest strengthening of tax revenue in the second half of the year—reflecting the gradual further recovery in output, some firming of prices, and the effects of the tax amnesty—and by lower than initially programmed expenditures, as a result of the measures announced in May and of additional savings to be obtained in the months ahead, and which are reflected in the modified lower ceilings on primary spending for the third and fourth quarters of the year.

16.   Despite the substantial efforts being made by most provinces to strengthen their finances, it appears now likely that their consolidated deficit will exceed the indicative target in the program (Arg$2.2 billion, 0.7 percent of GDP) by the equivalent of about 0.2 percent of GDP, partly reflecting a substantially larger deficit in 1999 than originally estimated. Accordingly the government is proposing that the program ceiling on the increase in the consolidated public sector debt be raised to Arg$ 7 billion (2.4 percent of GDP). Efforts were made to overcome the technical difficulties encountered in implementing the proposed system to monitor the provinces’ foreign exchange-denominated and domestic bank debt, and the system became operational during August 2000.

17.   As indicated in the previous MEP, the targeted reduction of the federal and provincial deficits in 2000—in conjunction with the payment, or securitization of some government liabilities related to court rulings—is still expected to result in a modest increase in the ratio of the public debt to GDP this year. Over time, however, adherence to the deficit path mandated by the fiscal responsibility law is expected to result in a progressive decline of the public debt relative to GDP. During the program period, the ongoing efforts to smooth out the maturity profile of the debt, minimize its cost through active liability management, and promote the development of the domestic capital markets, will be continued. The government also intends to maintain its prefinancing cushion at an appropriate level, and to keep its recourse to short-term financing within the limits set in the program. Efforts will continue to be made to sell selected government assets, including remaining shares in privatized companies, and real estate properties. These operations are now expected to yield Arg$0.4billion in 2000.

18.   Financial policies will continue to aim at buttressing confidence in the domestic banking system and creating the conditions for further monetization of the economy and an adequate flow of credit to private sector. The Central Bank (BCRA) intends to keep the coverage of private sector bank deposits with liquid foreign assets at around 35 percent. The strong liquidity position of banks and the continued repurchase of outstanding Fund credit will allow the BCRA to continue reducing its net domestic assets, which are targeted to decline by Arg$1,080 million in 2000.

19.   The government expects the ongoing economic recovery to gather momentum as the year progresses and to result in average real GDP growth for 2000 as a whole of about 2 percent. With continued moderation in wage adjustments, the pickup in activity, together with the increased flexibility introduced in the formal labor market by the recent labor reform law, should contribute to a progressive reduction of unemployment.

20.   The external trade balance is projected to register a small surplus, reflecting the sustained growth of export volumes, which would more than offset the gradual recovery in imports in the second half of the year as domestic demand picks up. The terms of trade are projected to improve by nearly 4 percent in 2000, partly because of higher oil prices. The improvement in the external trade balance will more than offset the higher payments of interest and profits abroad, and the external current account deficit is expected to narrow to US$10.8 billion (3.7 percent of GDP), from US$12.3 billion (4.3 percent of GDP) in 1999. More than half of the external current account deficit is projected to be financed by net FDI. The overall balance of payments is expected to show a sizable surplus in 2000, allowing for a further buildup of international reserves throughout the year.

21.   As regards 2001, the government is confident that its demonstrated commitment to fiscal discipline and structural reform will, in combination with an expected more stable external environment, help strengthen domestic and external confidence, and facilitate a sustained recovery of credit and of domestic demand. In these circumstances, the government believes that average real GDP growth is likely to accelerate to about 3.7 percent in 2001, while prices will rise by less than 1 percent. On this basis, and in line with the Fiscal Responsibility Law, the government has prepared a budget proposal for 2001, which will be submitted to Congress in mid-September, and will target a reduction in the deficit of the federal government, on a cash basis, to around Arg$ 4.1 billion (1.4 percent of GDP). Attainment of such a target will be made possible by the further strengthening of revenues brought about by the acceleration of economic activity and the effect of the measures to improve tax administration that have been taken, and by a further containment of spending, which will also reflect the full year effect of the expenditure cuts made in 2000. As mandated by the Fiscal Responsibility Law, attainment of this budget target will go a long way to put the public finances on a sustainable medium-term path.

B.  Structural Reforms

22.   In addition to continuing its efforts to secure early congressional approval of pending reform legislation, the government will seek further structural reforms in other important areas, including the system of revenue-sharing (coparticipación) with the provinces; administrative reform; the promotion of private investment in infrastructure; steps to alleviate the conditions of the unemployed and the poor; and policies to promote the healthy development of the small and medium enterprises, strengthen competition in the economy, including through further trade openness, and modernize domestic financial markets.

23.   The government is seeking a new agreement with the provinces that will aim, among other things, at reducing the provinces’ overall fiscal deficit, so as to reach equilibrium by 2003; freezing nominal spending at the 2000 levels for a five-year period; adopting limits on the provinces’ debt; increasing transparency in the accounts of all levels of government; and establishing a Federal Social Assistance Trust Fund, financed with a portion of the automatic transfers to the provinces and a contribution from the federal government. The agreement also reaffirms the commitment to submit to Congress in the course of 2000 a proposed reform of the revenue sharing system, to become effective after the expiration of the existing Federal Pact at the end of 2001. The main elements of the proposals would be the inclusion of all federal taxes (except taxes on international trade) in the base of the revenue sharing formulas; the shift to a three year moving average in the calculation of the shared revenues, to smooth out the impact of cyclical fluctuations on provincial revenues; and the maintenance of the current distribution of revenues between the federal and the provincial levels of government.

24.   In the social area, the government’s efforts focus on improving the conditions of the unemployed and the poor. The government has increased budgetary allocations under the temporary employment programs, including the Trabajar program and the Emergency Employment Program (PEL). The government is also improving the allocation of the resources under these programs by making the selection of beneficiaries more transparent and by focusing on the head of household. To broaden the scope of the programs, entitlements under the Trabajar program have been lowered from Arg$200 to Arg$160 a month. Under the pilot Identidad program, the government aims at coordinating assistance efforts toward children in urban areas in the nutritional, educational, and health-related sectors. Efforts are also being stepped up to improve the management of emergency situations, in particular those associated with the consequences of natural disasters. In poor urban areas, the government is promoting the construction of essential sanitary infrastructure and the provision of drinking water.

25.   The government is also establishing a framework for delivering higher quality, and more cost-effective, public services by bringing in the private sector to develop basic infrastructure. This includes the establishment of a fund with government assets to help provide guarantees to, and lower the financial costs for, the private contractors entrusted with the construction of public infrastructure and/or provision of public services. Under this scheme, private contractors would undertake the construction, maintenance, and operation of public infrastructure, and lease it to the government upon completion.

26.   With a view to fostering the development of the domestic financial market, efforts are being made to, among other things, introduce new financial instruments, strengthen the regulatory framework for nonbank financial intermediaries, and improve ties with other financial markets in Latin America. The government is seeking congressional approval of proposed changes to the BCRA Charter, with a view to strengthening the ability of the latter to deal with potentially troubled financial institutions. The BCRA is continuing its efforts to strengthen bank supervision further through cooperation agreements with supervisors in main industrial countries and other relevant financial markets, and through appropriate training of its personnel. New legislation aims at enhancing the lending activities of Banco de la Nación (BN) toward small- and medium-sized enterprises. The government has strengthened the capital of this bank by transferring to it its shares in the Bank for Investment and External Trade (BICE). In recent months, the management of BN has taken steps to increase the transparency of its operations, limit exposure to individual debtors who have not received adequate credit ratings, and ensure adequate provisioning of its nonperforming portfolio.

27.   The government considers the promotion of competition in domestic markets critical to improve consumer welfare and the competitiveness of the economy. In the telecommunications sector, the government is taking advantage of the fact that contracts with the two main companies operating in that sector are due to expire by end-2000 to advance the process of deregulation. New entrants will be allowed to operate, and connection fees will be lowered by more than half, while steps are taken to ensure the provision of telephone services in remote areas, leading to significant additional investments in that sector. The government is working in a collaborative manner with the companies operating in utilities sectors, to eliminate the indexation of domestic tariffs to changes in the U.S. consumer price index.

28.   In August, Congress approved a law aimed at promoting the development of small- and medium-size enterprises while helping correct market imperfections that impede their development. The law includes the creation of two revolving funds to extend guarantees to borrowing by small firms, and to provide risk capital for long term projects. The capital for these funds would be constituted by reallocating part of the capital of the Investment and Foreign Trade Bank (BICE) and cofinancing with multilateral organizations and private commercial banks. There are also provisions for making annual allocations in the budget to provide partial interest rate subsidies to small businesses. The government is also working closely with the private sector to promote the formation of consortia of small- and medium-size businesses aimed at facilitating their access to foreign markets.

29.   The government is pursuing an open trade policy both within and outside Mercosur. In this context, it intends to eliminate the 3 percent surcharge on the Mercosur common external tariff starting at the end of this year. The government is also placing increased emphasis on institutionalizing mechanisms for the resolution of trade disputes, and on securing greater macroeconomic convergence, through an improved policy dialogue. The member countries of Mercosur, as well as, Chile and Bolivia, are actively engaged in harmonizing statistics, particularly in the fiscal and balance of payments areas.

Technical Memorandum of Understanding

This memorandum presents a detailed definition of the variables included in the quantitative performance criteria table annexed to the Policy Memorandum.

1.  Cumulative balance of the Federal Government. This balance comprises the result of the Federal Government (including PAMI and the Trust Fund for the Development of Infrastructure, and excluding transfers from the Central Bank and privatization receipts) and the result of the Central Bank (BCRA). The Federal Government result will be measured from below the line on the basis of: (a) debt information provided by public sector debt reporting system (SIGADE), including all short-term debt of the Federal Government; (b) net asset transactions of the Federal Government as reported by the Secretaría de Hacienda, the Dirección Nacional de Cuentas Internacionales (DNCI), and the Gerencia de Manejo de Reservas Internacionales of the BCRA; and (c) information on bank borrowing and bank deposits provided by the BCRA. The result of the BCRA is defined as interest earnings on gross international reserves (as defined below) plus interest on government bond holdings of the BCRA minus net interest paid on reverse repos. The limit on the balance of the Federal Government will be adjusted downward (i.e., a deficit would be allowed to widen) by up to Arg$300 million for the amounts paid as severance payments in the context of the retrenchment of personnel program underway in the second half of 2000. Furthermore, the limit will be adjusted upward (a smaller deficit) for the capital gains realized in the sale of financial assets.

2.  Cumulative ceiling on primary expenditures of the Federal Government. This ceiling applies to the noninterest expenditure of the Federal Government (including PAMI) and will be adjusted upward by up to Arg$300 million for the amounts related to severance payments mentioned in 1 above.

3.  Cumulative balance of the provinces. This balance comprises the consolidated result of the provinces, including the city of Buenos Aires. The result of these jurisdictions will be measured from above the line, with expenditure defined on an accrual basis, according to the information provided by the Secretaría de Programación Regional (SPR). This limit will be indicative, and will be adjusted upward by up to Arg$80 million for expenditures made from the Public Works Fund of the Province of Mendoza.

4.  Cumulative change in the debt of the Federal Government. This debt includes the disbursement of all foreign currency denominated and Argentine peso denominated debt obligations and guarantees, as defined in EBS/00/128 (June 30,2000), of the federal government (including public enterprises, PAMI, Inder, and trust funds). These debt obligations are defined to include those with local and foreign financial institutions, international organizations, bonds, and bridge loans. This limit will be adjusted: (a) downward (upward) for excesses (shortfalls) in privatization receipts relative to the program; (b) upward for amounts related to the restructuring of provincial debt by up to Arg$1.2 billion; (c) upward for debt issued in 2000 for the consolidation of past obligations by up to Arg$1.7 billion, plus debt consolidated by Inder; (d) downward by the net effect of debt cancellations or swaps, and (e) upward for debt issued to finance the Fiscal Stabilization Fund by up to US$385 million in 2000; (f) upward for borrowing up to US$1.3 billion from multilateral agencies on behalf of provinces and official banks (deuda indirecta) in 2000; (g) upward for amounts related to the severance payments referred in 1 above by up to Arg$300 million; (h) downward for the capital gains realized in the sale of financial assets; and (i) with regard to the position in December 2000, upward for borrowing up to US$4 billion related to 2001 financing requirements and deposited at the BCRA. The data used to monitor debt developments will be taken from SIGADE, including all short term debt of the Federal Government. The stock of debt will be valued at end-1999 exchange rates and measured at end-period.

5.  Cumulative change in short-term debt of the Federal Government. It includes all domestic and foreign federal and federally guaranteed debt with an original maturity of one year or less.

6.  Cumulative change in the debt of the Consolidated Public Sector. This debt includes the sum of the changes in the debt of the Federal Government as defined in 4 above (including the corresponding adjustments) and that of the provincial governments and the city of Buenos Aires, net of changes in intergovernmental debt. The debt of the provincial governments and city of Buenos Aires, will be defined to include obligations to local and foreign financial institutions, to international organizations, and bonds (excluding peso denominated bonds placed outside the financial system). The limit on this provincial debt will be adjusted: (a) downward (upward) for excesses (shortfalls) in privatization receipts relative to the program, (b) downward for capital gains realized in the sale of financial assets, and (c) upward (downward) for any increase (decrease) in net deposits of the provinces in the banking system during the year, with the exception of the use of deposits from the Public Works Fund of the Province of Mendoza mentioned in 3 above. The upward adjustment on account of an increase in net deposits of the provinces, which allows for over-borrowing, will be limited to Arg$1 billion. The data used to monitor provincial debt will be provided by the SPR, the SIGADE and the Central Bank. The stock of debt will be valued at end-1999 exchange rates and measured at end-period. This limit will be indicative for the third quarter of 2000 and binding thereafter.

7.  The net domestic assets (NDA) of the BCRA are defined as the difference between monetary liabilities and net international reserves (NIR) of the BCRA, both measured on the basis of end-of-period data. The monetary liabilities include currency issued, legal bank reserves, liquidity requirements (reverse repos) and public sector deposits (government and Anses) at the BCRA. NIR is defined as gross liquid international reserves of the BCRA less foreign liabilities, and will be valued at exchange rates of December 31, 1999. Gross liquid international reserves include BCRA holdings of gold, SDR’s, foreign currency in the form of cash, deposits abroad, and government securities of investment grade of OECD countries and Argentina’s net cash balance within the Latin America Trade Clearing System (ALADI), excluding the accounting effects on holdings of reverse repo operations. This definition of reserves excludes central bank holdings of government bonds. Liabilities to the IMF will be valued at US$1.37 per SDR. The limit on net domestic assets will be adjusted upward by the equivalent of purchases from the IMF under the arrangement. Also, the limit for December 2000 will be adjusted upward for up to Arg$200 million on account of temporary liquidity needs reflected in an equivalent increase in repos (pases activos).