Argentina and IMF closer to an agreement
With the return to Buenos Aires this Thursday of the IMF permanent representative in Argentina John Dodsworth and the advance in Congress of legislation requested by the multilateral credit organization, both sides seem closer to reaching a medium term agreement.
Argentine Congress approved this week reforms to the Central Bank chart, ensuring a greater autonomy, and a bill of Financial Entities geared to help rebuild the banking system. However Congress decided to postpone the debate on fiscal reforms, also requested by the IMF.
Argentina is speeding negotiations on a three years agreement trying to avoid a 2,9 billion US dollars repayment deadline next September 9, that the President Kirchner administration has anticipated is not willing to repay with Central Bank international reserves. Argentina's Central Bank president Alfonso Prat-Gay is currently in Washington in a bankers' forum and is expected to meet with IMF Deputy Managing Director Anne Krueger.
However IMF Managing Director and Chairman Horst KÃÃ‚Â¶hler in an official release said this Thursday that "the Fund continues to work closely with Argentine authorities to construct a strong medium-term program that will entrench strong growth and poverty reduction, while allowing Argentina to restore fiscal sustainability".
Mr. KÃÃ‚Â¶hler statement follows the Executive Board completion of the financing assurances review related to the fifth and final disbursement under Argentina's seven-month, SDR 2.17 billion (about US$3 billion) Stand-By Arrangement, which was approved on January 24, 2003. The completion of this review enables the release of the final disbursement under this Arrangement, for an additional SDR 226.2 million (about US$310 million).
The IMF Executive Board also reviewed matters related to a non-complying purchase by Argentina in an amount equivalent to SDR 226.2 million (about US$310 million) on June 20, 2003, following the completion of the second review of the Stand-By Arrangement and breach of obligation. (A non-complying purchase is a drawing made by a member country under an IMF arrangement that is later found to have been made on the basis of incorrect information. For its part, Article VIII, Section 5 requires members to provide accurate information to the IMF, including in the context of an IMF arrangement, for specific information).
Mr. KÃÃ‚Â¶hler added that Argentina has continued to make welcome progress under the Stand-By Arrangement. "The end-June fiscal performance criteria were met with significant margins, and efforts continue toward normalizing relations with creditors. In particular, the Executive Board welcomed the recent meetings held with creditor groups. On the basis of this progress, the Fund has completed the fourth financing assurances review".