[stop-imf] Argentina and IMF Lock Horns as Deal Expires

[Robert Weissman]

World Bank Press Review
Sept. 02, 2003

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Argentina and IMF Lock Horns as Deal Expires
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Argentina and Brazil are among the Latin  American countries that are
criticizing the IMF these days, reports La Tribune (France, 9/2).
Argentina has to pay back its $2.9 billion loan by September 9th and it
seems likely that the country might default. Yet both Argentina and the
IMF would officially like to avoid this.

Argentina will present its rescheduling and restructuring plans at the
IMF/World Bank Annual Meetings in Dubai at the end of the month. Brazil on
the other hand, which has always been considered to be a =93good pupil=94 o=
f
the IMF, might try to battle recession without the help of the IMF. This
is a possibility that was aired by President Lula very recently. According
to some this might be a good idea since Brazil=92s economic performances,
even if the country is in a recession, are promising. Others say that even
a partial agreement with the IMF would increase Brazil=92s credibility on
the markets allowing it to continue its rigorous economic policies.

Argentina on Monday began life without the IMF as its interim agreement
expired amid increasingly frustrated efforts to strike a replacement deal,
the Financial Times (9/2) reports meanwhile.

A new deal - Argentina and the Fund are aiming at a three-year agreement -
is vital for President N=E9stor Kirchner's administration.

An IMF agreement would allow the country to roll over the debt. It would
also provide a foundation for economic recovery and for a
debt-restructuring offer to international creditors after Argentina
announced the biggest sovereign default in history in December 2001. Yet
with just a week to go before the September 9 deadline, fundamental
differences still separate the two sides. The IMF wants Argentina to pay
back at least some of what it owes the fund. Argentina wants to roll over
all its IMF debt, including interest payments.

Argentina's draft plan to restructure its defaulted external debt will
include three separate categories of bonds, Dow Jones (9/1) adds business
daily El Cronista reported Monday. Citing sources in Economy Ministry, the
newspaper said the draft would offer bondholders a choice of bonds at par
but with a lower interest coupon and longer maturities, bonds with a
discounted principal and bonds with the interest coupon tied to gross
domestic product.