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To: Brasco One who wrote (132441)	11/1/2001 5:22:00 PM
From: patron_anejo_por_favor	Respond to of 436258

I see Argentina is making great strides toward solving it's debt crisis!<G> quote.bloomberg.com 11/01 15:05 IMF Rules Out New Loans for Argentina; Bonds Tumble (Update5) By Emily Schwartz Washington, Nov. 1 (Bloomberg) -- The International Monetary Fund ruled out any additional financing for Argentina unless the government forces provinces to accept a cut in federal payments. The benchmark floating rate bond plunged more than 7 percent to its lowest level in six years as provincial governors indicated an agreement is unlikely, increasing the prospect of a default on some of the nation's $132 billion of public debt. ``We recognize the difficult political situation down there and the difficult political discussions between the central government and the provinces in particular,'' IMF spokesman Thomas Dawson said. ``Resolution of that is naturally a requirement for going ahead with the program.'' Overnight interest rates in pesos more than tripled to as high as 190 percent as domestic banks, which hold $9 billion of government bonds, braced for a wave of withdrawals after deposits fell by 11 percent, or $9.1 billion since the end of June. Pesos for December delivery fell to 1.055 pesos per dollar from 1.03 pesos, signaling waning confidence in the ability of Argentina to maintain its one-to-one peg with the U.S. dollar. The floating rate bond due 2005 fell 4.25 to an offer price of 49.75, the lowest level since March 1995. That pushed the yield up to 50.5 percent, triple the yield of June. Rating agencies say Argentina will be in default if it forces investors to swap debt for new securities that have lower value. Negotiations The government, in talks with provincial governors for 17 days, wants to reduce the $1.4 billion it transfers to provinces each month in tax revenue. In exchange, it promised to help cut the provinces' debt burden by requiring domestic banks and pension funds swap at least $14 billion of provincial bonds and loans for new securities. The government and provinces are ``very far away'' from an agreement, said Carlos Ruckauf, the governor of the Buenos Aires province. Dawson suggested that Argentina may have trouble obtaining a $1.2 billion loan payment from a $22 billion package, which was expected by the end of the year, unless the government fulfills its pledges to the fund. The government had hoped to speed up that payment, analysts said. The government has counted on IMF loans to make a proposed debt exchange more attractive to investors. The government has selected Merrill Lynch & Co. to help advise on lowering financing costs on $95 billion of outstanding bonds through a similar exchange. Merrill International President Jacob Frenkel arrived in Buenos Aires today to meet with government officials. The government has said the new securities would pay lower interest but be guaranteed by IMF and other international loans. $3 Billion If the government can't meet its commitments to the IMF, Argentina won't receive a $3 billion payment intended to be used in the planned debt exchange, Dawson said. Release of that money ``would require the program being on track,'' he said. In addition, he said, an acceleration of funds ``is not being considered. It is not in the cards.'' President Fernando de la Rua said the government would seek to reduce debt payments next year by $3 billion through swaps for new securities backed up with government guarantees, Radio Mitre reported. De la Rua said details would be announced today. U.S. Treasury Secretary Paul O'Neill has indicated that any more assistance for Argentina should come from the IMF and not the U.S., which is the fund's largest shareholder. The IMF still hasn't scheduled a visit by an IMF team to Argentina, which would have to finish its work before the lender can release the next payment from the credit line. ``We would expect a fund mission would go down once the authorities have concluded their considerations,'' Dawson said. ``That could be in the near future and would be expected to happen once sufficient progress has been made on the fiscal side.''