Argentine opposition question 2008 budget forecasts

By Hilary Burke and Lucas Bergman

BUENOS AIRES, Sept 19 (Reuters) - Opposition lawmakers said the government was underestimating 2008 economic growth and inflation after the economy minister presented next year's budget bill to Congress on Wednesday.

Opposition leaders criticized the government for forecasting 4 percent economic expansion next year when annual rates have not dipped below 8.5 percent since 2003.

They described this as a government ploy to spend extra revenue without oversight, citing the 2007 budget, which also put growth at 4 percent. President Nestor Kirchner has said the economy should grow above 8 percent this year.

"Our estimates show that Argentina will not grow less than 6 or 6.5 percent (in 2008) and also show the inflation rate is nearly double what has been presented here," leftist legislator Claudio Lozano told local television.

Economy Minister Miguel Peirano confirmed the key economic targets announced Friday: gross domestic product expansion of 4 percent, inflation of 7.3 percent by December and 7.7 percent on average, and a primary budget surplus of 3.15 percent of GDP.

The government raised the outlook for the 2008 trade surplus, however, to $11.03 billion from $10.06 billion, without explanation.

Peirano defended the conservative growth forecast and steered clear of discussing inflation during his 35-minute speech. He did not take any questions.

The minister said critics "are ultimately highlighting the government's ability to collaborate with all Argentines so that these budget targets, which are significant and positive, could be surpassed."

"And if we surpass these targets, I'm certain the resources will go toward policies that favor social sectors, increasing pension benefits or boosting resources for the productive sector," Peirano said.

INFLATION

Argentina's consumer prices have risen 5 percent in the first eight months of this year, compared with 6.1 percent during the same period of 2006, according to the INDEC national statistics agency.

But analysts, consumer groups and opposition leaders believe the government has been underreporting inflation since January, when the head of INDEC's price unit was replaced.

The government denies any manipulation of the data, but many private analysts forecast year-end inflation in 2007 at between 13 percent and 20 percent.

"I would have liked to have asked how they are going to reach 7.7 percent (average) inflation. I think that level of inflation is absolutely possible, but not with this government's policies, which are pushing inflation above 20 percent," said legislator Jorge Sarghini, an ally of presidential candidate Roberto Lavagna, a dissident Peronist.

Argentina holds a general election on Oct. 28, and first lady and senator Cristina Fernandez de Kirchner is the front-runner to win the presidency. She has vowed to largely follow her husband's economic model.