MercoPress. South Atlantic News Agency

IMF admits financial “nervousness”

The International Monetary Fund, IMF, said today that negotiations with Argentina regarding credit assistance have received a renewed thrust and anticipated several missions will be travelling to Buenos Aires to support the new situation.

In a rare press conference IMF spokesman Thomas Dawson said that last weeks meetings with Argentine Finance Minister Roberto Lavagna had seen progress, adding that towards the end of this week or next week, a team of IMF economists will be arriving in Buenos Aires.

Furthermore, in a surprising change of attitude, Mr. Dawson admitted that "financial markets in Latinamerica are nervous", but dismissing there was any risk of an Argentine crisis contagion to the rest of the region, "with the exception of neighbouring Uruguay".

"Clearly markets are nervous, but it's nothing compared to the contagion we saw in 1998", said Mr. Dawson referring to the 1997 Asian financial crisis that then spread to Russia, Brazil and in a milder form to Chile.

With Argentina defaulted and talks with the IMF stalled since last December, plus prospects of a Socialist oriented victory in the coming October presidential election in Brazil, regional markets have been more than "nervous", rather "turbulent", the unanimous diplomatic word used by officials from all Mercosur member countries to describe the turmoil.

The shocks of the situation even reached Mexico and Chile with their currencies suffering the brunt although both countries were so far considered immune.

Besides, the growing foundering of the Duhalde administration unable to restore a minimum of financial stability and hope, is rapidly becoming a time bomb with 24% unemployment, half of the Argentine population living below the poverty line and streets protests becoming ever more violent. Last week two young jobless were apparently shot dead by security forces during the blockade of one of Buenos Aires main access bridges.

Analysts estimate the focus of the situation began to change during the G 8 summit in Canada where several European countries, mainly France, Spain and Italy, with massive investments in Argentina and Brazil, insisted in a more lenient attitude from the IMF and the US Treasury Department, obsessed with punishing Argentina for publicly celebrating in Congress last December's 141 billion US dollars foreign debt default.

Since then the United States seems to be sponsoring a more political attitude, (instead of "hands off") towards the regional situation. This could help to explain IMF's more encouraging signals towards Argentina.