A rchive Date
[ 10-09-2003 ]
Category
[ International Relations ]
sub-Categoy
[ Argentina ]
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[http://cnews.canoe.ca/CNEWS/World/2003/09/09/181143-ap.html
Argentina defaults on $2.9-billion US loan from IMF
Tue, September 9, 2003
BUENOS AIRES (AP) - Argentina defaulted on a $2.9-billion US loan owed to the International Monetary Fund on Tuesday, complicating efforts to restore its standing with international financiers.
It was the second time this year Argentina has failed to make a payment to a multilateral lender. It also missed a deadline on a $681-million payment to the World Bank in January. An Argentine government official, speaking on condition of anonymity, said the payment wasn't made by the close of business Tuesday but negotiations with the IMF are continuing.
The missed payment is not likely to immediately affect the economy but could further damage investor confidence at a time when the country has shown signs of beginning to emerge from a financial crisis that began in 2001.
Argentine officials said they are not willing to tap the country's $13.5 billion in reserves to make the payment without assurances of a new long-term deal. They aren't seeking any new loans but a rollover of about $12.5 billion the country owes the IMF over the next three years - a step that would give the economy significant breathing room.
Officials had been negotiating with the IMF for months to secure the long-term agreement. But talks appeared to stall last week after the IMF insisted the government implement deeper economic restructuring.
Argentina needs a new agreement to restructure the $103 billion in public debt it defaulted on in December 2001 at the height of its worst-ever economic crisis. That decision cut off badly needed external financing for both the government and local companies, leaving most businesses to rely heavily on cash instead of credit.
In recent months, the economy has stabilized after a turbulent period that forced a currency devaluation and a $143-billion debt-default overall.
Earlier this year, the IMF's executive board approved a $320-million loan installment as part of an interim program. That approval came despite Argentina's failure to meet several economic benchmarks.
As part of a new accord, the IMF wants Argentina to overhaul the banking sector, compensate banks for losses and increase public utility rates that were frozen since last year's currency devaluation.
But President Nestor Kirchner has been outspoken about giving priority to Argentina's domestic needs, dismissing IMF demands the country increase budget savings for those measures.
During the months of talks, Argentine and IMF officials have sought to mend a relationship that soured over the financial crisis. An IMF decision to suspend an emergency aid program months before the economy unravelled forced the country into default.
 World Fact Book (CIA)]
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