Argentina must have talks: IMF
With debt holders
Vivianne Rodrigues -- Bloomberg News
nationalpost.com
OTTAWA - Argentina must be more open to talks with international holders of the country's debt as it prepares to attempt a bond swap to cut interest costs, the International Monetary Fund's top official for Latin America said.
"It is very important for Argentina to talk to foreign investors" about its plans to restructure up to US$95-billion in debt, said Claudio Loser, the fund's director for the Western Hemisphere. "The time is now."
Earlier this month, a group of Argentina's international bondholders, including Morgan Stanley Investment Management and Massachusetts Mutual Life Insurance fund managers, organized to demand a say in the debt restructuring. Argentina has rebuffed the group's requests for meetings to discuss the swap.
This week, Argentina will start to exchange bonds held by domestic investors for securities paying lower interest rates to free up money for government finances. Once that's complete, Argentine Economy Minister Domingo Cavallo wants to swap debt held by investors outside the country.
Mr. Loser, along with Horst Koehler and Anne Krueger -- the fund's No.1 and No. 2 officials -- met with Mr. Cavallo in Ottawa yesterday. Mr. Cavallo presented details about the debt restructuring and also his strategy to revamp the economy, Mr. Loser said.
There were no talks about new funding, Mr. Loser said. Argentina still has about US$9-billion available from a credit line that the fund last increased in September.
"I cannot determine at this point when disbursements will take place," Mr. Loser said. "What I can say is that we are really working hard together with the Argentines to see how best we can provide the financial support and the technical support that they need."
Mr. Loser also said the fund doesn't provide a "fixed guideline of how the funds available should be used."
Cavallo said he was interested in using a pending US$3-billion IMF loan to promote growth instead of backing new debt in a restructuring.
The minister needs funds to help cope with the country's decelerating economy. In a budget proposal sent to the Argentine Congress in September, the government forecast 6% growth in 2002. Today, Mr. Loser said the country's economy could shrink as much as 1% next year.
"Next year is subject to considerable uncertainty and I would say the rate of growth if circumstances are difficult could be negative, minus 1%," he said. |
