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IMF panel to advise on Argentine economy

 

By: Thomas Catan and Alan Beattie
 Financial Times, July 11, 2002

 

The International Monetary Fund on Wednesday unveiled a panel of economic "wise men" to advise on Argentina's economic crisis, in an effort to break a growing deadlock between the two.

 Argentina and the IMF agreed to form the high-level panel during a recent visit to Washington by Roberto Lavagna, economy minister, after the tortuous, six-month aid negotiations became bogged down over disagreements.

The panel will comprise Andrew Crockett, departing head of the Bank of International Settlements, as well as former central bank governors Hans Tietmeyer from Germany, John Crow from Canada and Luis Angel Rojo from Spain.

The group will fly to Buenos Aires for a two-day visit starting on July 22.

Argentina describes the formation of the panel as "unprecedented" in nature, emphasising that it will also advise the IMF on what strategy to follow.

Argentine officials view the panel as a "second opinion" on the bitter economic medicine being prescribed by the international lender.

The IMF played down the significance of the panel, saying that similar advisory groups were formed during the crisis in Indonesia.

 Horst Kцhler, managing director of the IMF, said the committee would advise both Argentina and the IMF on the design of a monetary framework, including a "monetary anchor to control inflation and other institutional aspects, including central bank independence".

 "These are critical components of a strong and com prehensive stabilisation programme for Argentina," Mr Kцhler said.

Mr Lavagna told the FT last week that the idea of the panel had initially come up during a long dinner with the IMF in Washington in which "there were moments in which we had become bogged down and weren't advancing".

According to Mr Lavagna, the IMF originally suggested the panel should be made up exclusively of technical advisers. However, Argentine officials objected, because "we all agree on the theory. . . it's the practice in a particular social and political context [we disagree on]".

 Separately, Argentina's fractious political scene was shaken yesterday by the announcement by Carlos Reutemann, who is the favourite candidate of the US and many investors, that he would not be running for president in the March elections.

The surprise decision by the current governor of Santa Fe appeared to clear the way for Carlos Menem, former president of Argentina, to become the candidate of the Peronist party. The party is heavily favoured to win the elections.

On Wednesday, President Eduardo Duhalde also met Otto Reich, US assistant secretary of state, who is in Buenos Aires on a three-nation tour of the economically troubled region.

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