Argentina-Government dig into reserves.

ARGENTINA-DIGGING INTO FINANCIAL RESERVES.

Argentina’s primary budget surplus shrank 61 percent in March from a year earlier, in a third straight month of decline, the government said yesterday.

The primary surplus, which measures the government’s budget surplus before making debt payments, fell to 896 million pesos (US$ 240 million) from 2.28 billion pesos in March, 2008. The figure is seen as a key gauge of a country’s ability to service its debt.

It is especially important for Argentina, which has been locked out of international capital markets since it staged a massive sovereign default in 2002.

In February, Argentina’s primary budget surplus narrowed by 50 percent to US$1.6 billion. January’s surplus shrank by 41 percent to U$2 billion, year-on-year.

Argentina’s government has been aiming to increase the primary budget surplus to 3.27 percent of Gross Domestic Product, according to the 2009 budget, which was drafted last September, just before the global downturn hit Latin America’s No. 3 economy.

Unlike other regional governments, Argentina has stuck by its outdated budget goal.

Meanwhile, President Cristina Fernández said in a speech that the country’s trade surplus had risen six percent in the first quarter to US$3.4 billion.

That would point to a trade surplus of US$1.15 billion in March, up from US$819 million a year earlier.

The monthly trade surplus figure is due for official release on April 29.