[stop-imf] IMF "instrumental" in engineering Argentina's financial collapse -- creditors (BBC)

[Robert Weissman]

http://news.bbc.co.uk/hi/english/business/newsid_1722000/1722935.stm

BBC (London)								
December 21, 2001

IMF "instrumental" in engineering Argentina's financial collapse -- 
creditors

The IMF was "instrumental" in engineering Argentina's financial collapse 
because of irresponsible lending which "exacerbated" its foreign debt 
problem, foreign creditors have claimed.

Argentine people have seen their pensions taken away, unemployment 
soar, inflation jump and their industries decimated.

"The IMF... were instrumental in engineering this, lending an additional 
huge amount of money this year," Hans Humes, of Van Eck Emerging 
Market Funds and spokesman for a New York-based committee of 
Argentina's foreign creditors told the BBC's Today Programme.

Foreign creditors expect the collapse of the government to delay a 
restructuring of the nation's $132bn (£91.2bn) public debt and cause a 
default.

One rating agency said it will cost private investors half of the $97bn 
(£66.9bn) face value of their claims.

The International Monetary Fund decided two weeks ago to cut Argentina's 
$22bn credit line but denies it is to blame for the country's troubles.

Debt swap unlikely

Argentine President Fernando de la Rua resigned on Thursday as 
violence engulfed the country.

The widespread riots and looting were in response to more than four 
years of harsh austerity policies demanded by the IMF to repay the debt.

President de la Rua was only halfway through his four-year term and quit 
just hours after economy minister Domingo Cavallo.

The resignations mean the country is unlikely to be able make its
planned 
20 January debt swap.

By swapping out of current bonds and into new low interest bearing
loans, 
the government had hoped to cut its heavy debt servicing payments.

IMF blamed

"They (IMF) were really the last lenders to Argentina and have
exacerbated 
the debt overhanging the country," said Mr Humes, adding the IMF should 
take its share of losses.

"This is a market where you make your own risk estimates and that 
should apply to the private sector as groups like the IMF who are way
over 
their budget for lending to Argentina," he said.

"It's going to cut across everybody, banks, insurers, pension funds,
every 
financial institution would have some exposure," Mr Hume said.

Default rating

Fitch, the credit ratings agency, said on Thursday that Argentina is likely
to 
default on about $97bn of outstanding debt owed to private creditors.

The agency also said it did not believe that Argentina's currency peg, 
under which one peso is convertible into one US dollar, was viable, 
indicating a devaluation is the only option.

"The combination of a disorderly default and devaluation implies that 
creditors will ultimately be forced to write off at least 50% of the face
value 
of their claims on the Argentine government," Fitch said.