[stop-imf] NYT: Argentina Says It Will Skip International Loan Payment

[Robert Weissman]

New York Times:

Argentina Says It Will Skip International Loan Payment

September 25, 2002
By LARRY ROHTER

RIO DE JANEIRO, Sept. 24 - The Argentine economy minister
announced today that his country would no longer use its
diminishing foreign reserves to pay back loans from the
International Monetary Fund and other multitlateral lenders
and would thus miss at least one payment due next month, a
move that pushes Argentina closer to a formal break with
those bodies.

Meeting with foreign reporters in Buenos Aires, the economy
minister, Roberto Lavagna, also said that while Argentina
hoped to reach a new accord with the I.M.F., it was "not
going to sign just any old agreement." The government of
Eduardo Duhalde, he said, "will not renounce its policy of
social assistance," even if it means further delaying
negotiations that have been bogged down for months.

"There are two priorities which we will not abandon," Mr.
Lavagna said. "We will maintain social programs and ensure
the financing of provincial economies."

Mr. Lavagna's remarks were the latest in a series of
official statements indicating that Argentina was growing
impatient with the demands of the multilateral lending
bodies that are virtually its only source of foreign
credit. Commercial banks have been treating the country as
a pariah since the government defaulted on most of its $141
billion of public debt late last year.

Last week, shortly after the I.M.F.'s first deputy
director, Anne O. Krueger, indicated that Argentina must
take further steps to meet the fund's requirements for a
rescue package, the interior minister, Jorge Matzkin, said,
"There are opinions on the part of the International
Monetary Fund that have left even the most patient and
pliable of us fed up."

Also last week, the fund's managing director, Horst Köhler,
sent a letter to Mr. Duhalde, asking him to speed efforts
to break the deadlock. According to Argentine news
accounts, Mr. Duhalde promptly phoned Mr. Köhler to tell
him that "Argentina can only use its reserves to meet
future obligations if the country is under the umbrella of
an accord" with multilateral lenders.

Hoping to reach an agreement with the fund, Argentina has
already moved to a floating exchange rate for the peso and
has repealed legislation that could have been used to
penalize foreign banks whose behavior during the crisis has
been criticized. But Argentine officials said that I.M.F.
negotiators were demanding additional steps that included
deeper cuts in government spending and an end to court
rulings that allow depositors greater access to frozen bank
accounts.

In remarks published in Argentine newspapers today, Mr.
Köhler said that "we want to reach a deal with President
Duhalde" but need "a minimum amount of public consensus,
including with institutions like the judicial system and
Congress."

Mr. Duhalde, however, announced in July that he would be
leaving office nine months early and calling early
elections, and the main candidates to replace him are
shying away from any commitments to the I.M.F.

"It seems ill advised to me that the fund has expressed its
opinion about social plans," Alfredo Atanasof, Mr.
Duhalde's cabinet chief, told reporters today. "Köhler and
Krueger ought to know that if the enormous network of
social containment wasn't working, this country would have
gone up in flames."

Argentina has $2.25 billion in loans that it is required to
repay to multilateral lenders like the I.M.F., the World
Bank and the Inter-American Development Bank the last three
months of this year, and an additional $14.6 billion is
scheduled to fall due in 2003. But Argentina's central bank
reserves have fallen nearly 50 percent this year, to about
$9.5 billion.

Today's decision does not affect $329 million that is due
this month, which Argentina said it planned to pay.

"Argentina is going to fulfill all of its obligations, but
what has to be decided is when and how," said Mr. Lavagna,
who is scheduled to go to Washington later this week to
attend the fund's annual meeting.


http://www.nytimes.com/2002/09/25/business/worldbusiness/25ARGE.html?ex=1033961068&ei=1&en=7ace74d939bef546