MercoPress. South Atlantic News Agency

IMF and Argentine closer

An International Monetary Fund, IMF, delegation is expected next week in Buenos Aires to resume financial aid discussions with the Argentine government in an attempt to stabilize the country's economy going through one of its longest recessions in history.

The Duhalde administration desperately needs an agreement with the IMF to have access to international credit, including an initial IMF loan of 10 billion US dollars plus other contributions from multilateral organizations.

Argentina announced this week that it had finally complied with most of the IMF demands to resume discussions: reforming bankruptcy and economic subversion laws, plus the implementation of drastic expenditure cuts by the provincial governments, most of them cash strapped and forced to print their own local currencies. At least 24 different provincial bonds, or means of payment have been identified in Argentina.

However discussions won't be easy. IMF Managing Director Horst Koehler remarked this week he was shocked by the "irritating" slowness of the Argentine government to present a long term sustainable economic program, and IMF's chief negotiator Anooph Singh, who has been several times in Argentina, is not convinced about recent decisions regarding monetary and foreign exchange policies, particularly proposals for the liberation of bank assets frozen since last December and a constant source of protest by disenchanted depositors.

In spite of his weak political standing and growing opposition from inside the ruling coalition, President Duhalde has said that the only way to recovery is seeking help from international credit institutions, beginning with the IMF.

But with ever growing social unrest, rising unemployment and poverty, and fears of hyper-inflation, it has become extremely difficult for Mr. Duhalde who has threatened to resign on more than one occasion, to satisfy IMF demands, the Argentine people and the discredited undisciplined political system.

In this scenario with the local currency having lost 75% of its face value since last January, there's been a constant drain on the country's international monetary reserves as common citizens flock to seek refuge in the US dollar.

The announcement of the coming of an IMF mission was not enough to counterbalance Argentina's Central Bank decision to gradually retreat from standing firmly behind the local currency with the objective of preserving the country's remaining 10 billion US dollars in reserves.

Good sign from US economy

Another sign of United States economic recovery, unemployment dropped in May to its lowest level in seven years. The rate fell 0,2 and now stands at 5,8% following the creation of 41,000 new jobs in May, according to the latest report from the Labor Department.

Most analysts expected the May rate to jump to 6,1%. Manufacturing that lost 1,3 million jobs last year, recorded in May its smallest drop.

However economists say there still is concern among many businesses about the speed and strength of the US recovery, and are therefore reluctant to re-hire workers laid off during the recession.

The number of unemployed and first time job seekers plus those who have not looked for employment in the last twelve months but are willing to work remained stable in 13,1 million people. The percentage of US population with jobs in May was 62,9%, a 0,1% increase over April.

Average weekly income also increased from 501,71 to 502,74 US dollars. The upturn of the labor market in May had an encouraging boost for Hispanics with unemployment dropping from 7,9% in April. Among the black population rate of jobless fell from 11,2% to 10,2%.