[stop-imf] Brief clips: Argentina, Indonesia, Turkey (from WB development news)

[Robert Weissman]

> This summary is prepared by the External Affairs Department of the
World Bank.
> All material is taken directly from published and copyright wire
service stories
> and newspaper articles.
>
> For more news go to http://www.worldbank.org/developmentnews
> To subscribe go to http://www.worldbank.org/subscriptions/
>
> Selected Headlines for Tuesday, November 20, 2001:
> - ARGENTINA ASKS BANKS TO ACCEPT BOND WRITE-OFFS, I.M.F. MISSION SET.
> - INDONESIA, I.M.F. REACH DEAL ON 2002 REFORMS.
> - Also in this Edition: TURKEY'S DERVIS TO MEET I.M.F., WORLD BANK,
U.S.
> TREASURY.
>
> ARGENTINA ASKS BANKS TO ACCEPT BOND WRITE-OFFS, I.M.F. MISSION SET.
> With verbal support from the US, Argentina yesterday began asking
local banks
> and pension funds to accept big write-offs on their government bonds-a
risky
> effort the country hopes will help it avoid a full-blown default on
its debt,
> the Wall Street Journal Europe (p.8) and Wall Street Journal (p. A12)
report,
> adding that the government even thinks [the scheme] could become a
model for
> other crisis-hit developing countries.
>
> Unable to pay a growing interest bill on its annual payments because
of a deep
> economic slump, Argentina hopes to shave $4 billion off its annual
payments by
> getting local investors to trade in up to $60 billion in notes that
pay an
> average 11 percent for new loans with a seven percent interest rate.
They have
> until Friday to accept the exchange, and foreign bondholders will
later be
> offered a similar deal.
>
> Some banks said yesterday they were still studying the government's
proposals,
> but the majority are expected to accept the exchange.  But disgruntled
foreign
> investors said last Friday they had been frozen out of the process and
had hired
> lawyers possibly to press their claims in court.
>
> Argentine officials say the debt restructuring is voluntary and that
the country
> is acting in good faith by reaching out to its creditors, avoiding a
disorderly
> default like that of Ecuador in 1999 or Russia in 1998.  Wealthy
nations
> endorsed Argentina's approach over the weekend at the meeting in
Ottawa of the
> IMF and the G20 developing and industrialized nations.
>
> "I'm very helpful that the IMF will look favorably on the detailed
plan that
> Argentina has put together," US Treasury Secretary Paul O'Neill is
quoted as
> saying.  But although Argentine Economy Minister Domingo Cavallo
returned from
> the meetings with verbal support for his plans, there were no promises
of new
> financial help, says the story.  Cavallo had wanted $1.26 billion in
IMF money
> promised for December to be advanced so that the country could pay
debt coming
> due later this month.
>
> A Fund mission is required before the IMF's executive board can
consider
> approving the scheduled $1.26 billion disbursement from Argentina's
existing $22
> billion program, says AFP, noting that President Fernando de la Rúa
announced
> yesterday an IMF mission would arrive in Buenos Aires on November 26
to audit
> Argentina's public accounts.  He called the Fund visit a "crucial
step" in
> Argentina's efforts to avoid bankruptcy.  Separately, the Washington
Times (p.
> A10) reports Argentina's massive debt swap aimed at avoiding the
biggest default
> in history began under a cloud yesterday after international lenders
refused to
> release vital aid.
>
> The WSJE notes that British Chancellor of the Exchequer Gordon Brown
said in
> Ottawa that the world's richest nations were increasingly in favor of
adopting a
> bankruptcy protection procedure for governments similar to ones that
private
> companies enjoy.  But private sector investors prefer a case-by-case
approach to
> resolving countries' financial crises, says La Tribune (France, p.6).
Creating
> a mandatory framework for renegotiating debts would encourage
governments to
> pursue less sound policies in managing their accounts.
>
> In a separate report, La Tribune (p.6) notes that the IMF believes
that the vast
> reforms to the international financial architecture undertaken
following the
> Asian financial crisis are beginning to bear fruit.  The current
Turkish and
> Argentine crises have remained relatively limited, the Fund noted in a
report on
> financial crisis prevention and resolution published last weekend,
citing the
> much more selective approach that investors have been able to pursue
since the
> Fund tightened its financial surveillance work and required countries
to adopt
> international codes and norms for transparency.
>
>
> INDONESIA, I.M.F. REACH DEAL ON 2002 REFORMS.
>
> The IMF and Indonesia reached agreement today on broad economic
reforms to be
> implemented next year, a ray of light in the country's floundering
efforts to
> convince investors to return after four years of crisis, reports
Reuters.
>
> "The IMF mission believes that strong endeavors in implementing these
reforms
> will restore confidence in the government of Indonesia reform program
and
> sustain Indonesia's economic recovery in the period ahead," the Fund
is quoted
> as saying in a statement.  But investors are unlikely to stampede back
to
> Indonesia until the government of President Megawati Sukarnoputri
proves critics
> wrong by pushing the reforms through a maze of vested interests that
have
> hindered recent restructuring efforts, the story says.
>
> The fresh program is expected to be the fourth so-called letter of
intent under
> a $5 billion IMF loan deal and should pave the way for fresh loans of
some $400
> million, says the story.  It includes banking, privatization and
judicial
> reforms.  More important than the money is the apparent vote of
confidence an
> active IMF program gives the world's fourth most populous country as
it
> struggles to navigate a traumatic and messy transition from
authoritarianism to
> democracy.  Without such a deal in place, Jakarta would not be
eligible for debt
> rescheduling under the Paris Club of official creditors.  Agence
France-Presse
> and CNN.com also report on the IMF-Indonesia reform deal.
>
>
> TURKEY'S DERVIS TO MEET I.M.F., WORLD BANK, U.S. TREASURY.  Turkish
Economy
> Minister Kemal Dervis plans to meet this week with IMF, World Bank and
US
> Treasury officials to discuss Turkey's request for new loans, Dow
Jones reports
> an embassy spokesman said yesterday, noting that last Thursday, IMF
Managing
> Director Horst Köhler said he would recommend new lending to Turkey in
light of
> a nearly $10 billion financing gap for through 2002 in the aftermath
of the
> September 11 terrorist attacks on the US.
>
> Turkey is asking for a new loan package to cover that gap, and the IMF
is
> expected to negotiate a new standby loan arrangement with Turkey in
December to
> supplement its current $15.7 billion program, the story notes.
>
> The news comes as Leyla Boulton and Quentin Peel of the Financial
Times (p.14)
> write that success of the reform program has been undermined by the
continuing
> reluctance of the coalition leaders to explain or defend the changes.
Dervis,
> the chief spokesman for reform and who has no political base within
the
> government, says the ultimate aim is to arrive at "an economy which is
developed
> by the private sector and a small but effective state which regulates
the market
> and provides social justice."
>