MercoPress. South Atlantic News Agency

Debt rescheduling for Argentina

Finally the International Monetary Fund and Argentine officials worked out two a stages agreement that includes an additional 8 billion US dollars stand-by assistance, plus a “voluntary” rescheduling of Argentine foreign debt

The official announcement by IMF officials in Washington indicated that the current 14 billion US dollars stand-by credit will be increased by 8 billion, reaching 22 billion. Five billion are available as soon as approved by the IMF, probably in September, and the rest according to programmed installments.

However the most significant aspect of the agreement is the IMF proposal for a "voluntary" and market rescheduling of Argentina's debt (currently 128 billion US dollars) to help increase the viability of the huge sum owed. The 3 billion US dollars apparently are specifically earmarked for this operation which will be also be sponsored by other multilateral financial institutions such as the World Bank, Interamerican Development Bank and even the G 7 Group.

Argentina promised to sustain the "zero-deficit" policy approved by Congress last July 29th., which will include provincial governments and a review of the fiscal federal co-participation system. Similarly with government reform and the "strengthening" of government banks. IMF is particularly interested that Banco Nación, the country's largest, and government run, begins a privatization process.

Once a mid term balanced and sustainable budget is ensured, the second stage begins which could mean helping Argentina purchase some of its own debt, lowering servicing costs