CORRECTED-UPDATE 2-Argentina July primary surplus widens 56 pct

 

(In paragraphs 2, 8, and 10, corrects budget surplus to pesos from dollars) (Recasts, updates with Economy Ministry confirming numbers, adds details, background)

BUENOS AIRES, Aug 19 (Reuters) - Argentina's primary budget surplus widened by 56 percent from a year ago and the trade surplus topped $1 billion in July, President Cristina Fernandez said on Tuesday, in what appeared to be an attempt to dispel investor concerns about the country's economic health.

Argentina's primary budget surplus totaled 4.02 billion pesos ($1.31 billion) in July as government income rose 31.9 percent year-on-year thanks to increases in takes from value-added tax, foreign trade tax and financial transaction taxes, the economy ministry said in a statement.

Spending rose 27.1 percent largely due to subsidies to the energy sectors and spending on social assistance programs, the ministry said.

The Argentine leader announced the broader primary surplus and trade figures in a speech several hours after the government said industrial production jumped 9.2 percent in July from a year earlier.

The government rolled out the factory output figure six days before it was originally scheduled to be released in what appeared to a concerted effort to brush away investors worries about the economy.

Last week, the government began a plan to buy back short-term debt after Argentine bond prices fell sharply on concerns over the country's ability to meet financing needs in the years ahead amid rising inflation and spending while commodity prices decline.

"According to some analysts, it would seem we are on the verge of collapse. There are voices that are trying to discourage us. But we've been working with this ... political, social and economic model for five years," Fernandez said in the speech.

The government said the primary surplus -- a key gauge of a country's ability to service its debt -- rose 1.45 billion pesos compared to July 2007.

"The result shows (the government's) accounts are solid," said Economy Minister Carlos Fernandez, who is not related to the president.

A central bank poll of analysts forecast a primary surplus in July at a median of 2.9 billion pesos BCRA30.

Fernandez, the president, said the trade surplus in July was just above $1 billion, but did not provide any specifics about the figure, which is expected to officially announced on Aug. 25.

Earlier on Tuesday, the government said industrial production climbed in July from a year earlier, rebounding after a major slowdown in June.

Factory activity has been hit in recent months by a farmer conflict that saw farmers stage repeated protests from March through June against a tax increase on soy exports.

The Argentine president eventually scrapped the tax hike after the Senate rejected it in mid-July.

($1 = 3.065 Argentine pesos) (Reporting by Walter Bianchi; Writing by Kevin Gray; Editing by Diane Craft and Carol Bishopric)