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  Argentina to Rethink Economic Plan 


By: Maya Pertossi
The Washington Post, March 19, 2002

 

Buenos Aires, Argentina –– Argentina will be forced to draw up a new economic recovery plan if the International Monetary Fund refuses to restore billions of dollars in emergency aid, the country's top banker warned Wednesday.

Central Bank President Mario Blejer described fresh IMF financial aid as crucial to President Eduardo Duhalde's efforts to rescue recession-wracked Argentina from its worst economic crisis in decades.

Duhalde's "plan depends on an agreement with the IMF," Blejer said. "If there is no agreement, we will be forced back to the drawing board."

He did not elaborate on what a new plan might entail, but Blejer insisted Argentina could not rebound from a debt default and a steep currency devaluation without help from the international financial community.

On Thursday, Duhalde is scheduled to meet with IMF Managing Director Horst Koehler during a U.N. international conference on aid for poor nations in Monterrey, Mexico.

The Argentine president is expected to repeat his calls for a resumption of aid. Argentine officials say they need at least $25 billion in bailout funds to bolster the shaky banking system and revive the shattered economy

, now in its fourth year of recession.

IMF support is also seen as key to helping the country rebuild its relationship with international creditors.

A high-level IMF mission examined Argentina's finances last week during a visit to Buenos Aires, but offered few signs of when and if Argentina would soon receive any new funds.

Meanwhile, Blejer defended the Central Bank's active role in defending the peso, which has lost more than 60 percent of its value since it was allowed to float against the dollar in January.

He said economic planners had no choice but to spend some of the country's reserves to defend the currency amid a plunge that has generated fears of inflation and a further deterioration of the economy.

"Allowing the peso to depreciate would almost certainly create an inflation problem," he said.

South America's second-largest economy after Brazil, Argentina was gripped by triple-digit inflation in the late 1980s during its last economic crisis.

Inflation for the first two months of 2002 was 5 percent, the government has said, but consumer groups have complained that prices of basic foodstuffs at some grocery stores have shot up by more than 40 percent in recent weeks.


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