Argentina makes case before IMF
Seeks US$1.3B in aid
Brian Winter -- Reuters
BUENOS AIRES - Fernando de la Rua, the unpopular Argentine president, pleaded with business, politicians and unions yesterday not to rock the boat as the country tried to convince creditors and the International Monetary Fund to halt its slide toward default.
But investors said that as Argentina takes offers this week on a massive debt swap aimed at reducing its interest costs, it faces an uphill task of persuading the IMF to forgive its fiscal sins and release urgently needed cash.
"It's going to be very tough," said Ben Laidler, an economist for UBS Warburg. "The IMF is in a difficult position because they've given Argentina billions of dollars, and Argentina hasn't lived up to what it said it would do."
Despite its broken promises to control spending, Argentina wants an IMF delegation in Buenos Aires to release US$1.3-billion in scheduled aid to help pay wages and debt costs with other funding dried up by a recession in its fourth year.
With the steady decline in tax revenues since mid-year and many industries in crisis, Argentina said last week it expected to post a US$7.8-billion budget deficit target this year, exceeding the IMF target of US$6.5-billion.
Thomas Reichmann, the head of the IMF mission, told reporters he would be in Buenos Aires until the middle of next week examining how to help with the formulation of Argentina's 2002 program, but he provided no other details.
Without the fresh IMF cash, many analysts say Argentina could be pushed to the brink of bankruptcy, heightening the prospect of a massive debt default or a devaluation of the peso currency from its decade-old parity with the U.S. dollar.
As the IMF auditors met with officials, President De la Rua asked the gloomy country to present a united front, after the weekend produced strong support from local business and union leaders and Spanish and Latin American heads of state.
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