Argentina debt-swap plan lifts stocks
Rescue package: De la Rua to address nation, give details of reforms
Mark Egan -- Reuters, with files from Dow Jones
Argentine stocks rallied late yesterday on word President Fernando de la Rua would address the nation last night, to announce a package of economic measures after weeks of delays.
Shares climbed on the expectation that Mr. de la Rua and Domingo Cavallo, Economy Minister, would announce a series of long-awaited measures. A source familiar with the announcement said Mr. de la Rua would reveal that he has ordered a restructuring of Argentina's US$95-billion of outstanding bonds.
In recent weeks, the market has grown impatient waiting for growth-based economic measures and details on how Argentina plans to restructure some of its US$132-billion debt load.
The International Monetary Fund had rattled Argentine markets earlier yesterday, saying it was not considering speeding cash to Buenos Aires and distancing itself from a possible debt restructuring there.
IMF spokesman Tom Dawson poured cold water on speculation the international lender might speed up disbursement of a much-needed US$1.3-billion December loan payment, saying making faster 2002 payments was not being considered. "That is not being considered and is not on the cards at this time," Mr. Dawson.
Earlier in the day, Mr. de La Rua announced some details on a planned debt swap, saying Argentina would save US$3-billion to US$4-billion next year in a voluntary restructuring.
While admitting the IMF was in constant contact with Argentine authorities and could offer technical assistance and advice, Mr. Dawson stressed that the fund was "not a party to negotiations" related to the Argentine debt situation.
"That is a matter of discussion in the first instance between the Argentine authorities and their creditors," he said, adding that a swap remained a possible part of the IMF's program.
In August, the IMF increased lending to Argentina to US$22-billion, with US$3-billion of those funds earmarked for a debt swap, which Mr. Dawson said the IMF hoped would be voluntary.
Mr. Dawson said the IMF expected the US$3-billion it set aside for a potential debt swap would be accompanied by funds from the World Bank and the Inter American Development Bank, but he stressed the fund was not arranging such a linkage.
On Wednesday, Paul O'Neill, U.S. Treasury Secretary, had also distanced himself from Argentina, saying the IMF was the instrument of choice to deal with the country.
Mr. Dawson stressed that Argentina had to hammer out how it plans to implement its fiscal plans. Once that was completed, he said an IMF mission could travel to Buenos Aires for the latest review of the nation's loan program.
"That could be in the near future and would be expected to happen once sufficient progress has been made on the fiscal side," Mr. Dawson said.
"We recognize the difficult political situation down there and the difficult discussions between the central government and the provinces in particular and resolution of that, naturally, is a requirement of going ahead with the program," Mr. Dawson said.
"It is difficult to say when it will be resolved ... the action at this point is in Buenos Aires."
Mid-term elections in Argentina two weeks ago left the government with less power in Congress and made it more difficult for it to reach agreement on the economic reforms needed to assuage the IMF.
Mr. Dawson played down fears that a possible Argentine default could cause a broad emerging-markets crisis.
"The market ... is showing quite an ability to discriminate, so the idea of contagion in the sense that we have known it in past crises just simply does not seem to be on the cards," he said.
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