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IMF OKs Year Delay in Argentina Loan
Washington –– The International Monetary Fund remains fully committed to helping Argentina recover from its financial crisis and will give the country an additional year to repay a $136 million loan coming due this week, the head of the agency said late Tuesday.
IMF Managing Director Horst Koehler made the announcement after a meeting with Economy Minister Roberto Lavagna, who arrived in Washington for two days of talks with officials at the IMF and the Bush administration.
"Minister Lavagna's visit provided a welcome opportunity to review the efforts of his new economic team and the central bank to develop a comprehensive program that would address the deteriorating economic situation faced by Argentina," Koehler said in a brief statement.
Argentina is hoping that the IMF soon will agree to begin negotiating up to $9 billion in new loans to help stabilize an economy hit by the biggest government debt default in history, a botched devaluation of the peso and a serious banking crisis.
Koehler did not announce that the agency was ready to begin negotiations for new loans. He said, however, that as a "demonstration of the fund's support" the agency's 24-member executive board voted Tuesday to give Argentina another year to make a $136 million repayment on previous loans. The repayment would have come due Wednesday.
"The IMF remains fully committed to doing all that it can to help Argentina put together the strong program needed to stabilize its economy and lay the foundations for a return to sustained growth," Koehler said.
"The task is imposing, but it can be accomplished, through decisive action by the government, supported by the Argentine people," Koehler said.
Last week, both the IMF and the Bush administration praised Argentina's Senate for overhauling the country's bankruptcy law, one of three major conditions the IMF has set for the resumption of new loans.
The IMF also is demanding repeal of a so-called subversion law that the courts have used to intimidate bankers and to implement agreements with all the provinces to curb deficit spending.
Those overhaul measures are incorporated in a 14-point economic plan revealed this year by President Eduardo Duhalde, but his government has faced stiff opposition over implementation of various parts of the austerity program.
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