Our old pal Argentina in a new bind>
Argentina fights IMF on terms for new loan
Bloomberg News
Thursday, September 11, 2003
Argentina is resisting a demand by the International Monetary Fund that it repay existing debts three months before receiving new loans, the cabinet chief, Alberto Fernandez, said Wednesday.
The standoff has delayed the signing of a three-year accord, prompting Argentina to default on a $2.9 billion payment Tuesday, the biggest ever on an IMF loan. Fernandez said Argentina wanted disbursements at the same time it made payments on the $14.2 billion it owed over three years. He also said the accord would not obligate the government to raise utility rates, a condition the IMF was demanding.
"It has been a game of brinkmanship that Argentina has won," said Richard Segal, research director at Exotix, a London-based brokerage for emerging market debt. "This sets a very awkward precedent for the IMF." An IMF spokesman, Thomas Dawson, declined to comment on details of the negotiations. He said the missed payment was "regrettable" and that the fund was "hoping to reach an agreement soon." He said the IMF did not consider the missed payment a default yet.
The Argentine president, Néstor Kirchner, decided not to make the payment until a new accord is reached because drawing down the money from the central bank's $13.6 billion of foreign reserves might threaten the country's recovery from its worst recession on record, Fernandez said.
Neighboring Brazil is also considering renewing a loan accord with the IMF that will expire in November. Brazil owes the IMF $29 billion.
Argentina's default puts it with a group of countries that include Iraq, Liberia and Sudan that have failed to meet obligations to the IMF.
Fernandez said Argentina and the IMF were "very close" to an accord and would probably reach one by Monday. "We still differ on the method of the payments - we want to make the payments and then immediately have them reimburse it," Fernandez said on Radio Mitre. Luis Secco, an economist who runs the research group Secco in Buenos Aires, said the IMF is asking for the lag between payments and disbursements to help it hold the South American country to targets set in the accord.
Copyright © 2003 The International Herald Tribune |
