IMF to Consider Argentina Lending Program
The International Monetary Fund agreed Friday to consider a "transitional" lending program for Argentina that would provide the debt-strapped nation with enough money to repay existing loans ? but delay new financing until after next year's presidential elections. The decision would allow Argentina to keep from going into default to the IMF, which would have cut off the country's last resource of foreign support. Negotiations for loans beyond making payments on its existing debt burden will not come until spring, when elections take place.
In a statement, IMF spokesman Thomas Dawson said that the executive board had expressed its "strong and continuing commitment to work with Argentina" to develop an economic reform program that can qualify for new loans.
The decision came after the final meeting of the year of the IMF's 24-member executive board, which handles day-to-day operations for the 184-nation lending institution.
Dawson said that negotiations on the transitional loans would be held early next month with approval expected "as soon as possible" after those discussions were completed. Dawson did not provide any estimate of how much loan money might be involved.
The IMF for most of 2002 has been rolling over loan payments due from Argentina but under its rules it cannot extend these payments for a second year. The first loan that the IMF will not be able to rollover is due Jan. 17, for about $1 billion.
Argentina has already defaulted on some payments to the World Bank and Inter-American Development Bank.
In a statement, the Bush administration said it understood Argentina would use the money to clear up those arrears.
"Over the coming months, the international community will continue to work with Argentina to develop a longer-term program geared toward restoring a path of sustainable growth," the Treasury Department said.
New loan negotiations between the IMF and Argentina have lasted most of this year. Argentina is going through the worst economic crisis in its history.
In December 2001, the IMF refused to extend further loans to the country, forcing Argentina to default on most of its $141 billion in foreign debt, the largest government default in history. The talks over new loans have stalled over details. The IMF has been urging the government to adopt a budget with the goal of a surplus, excluding interest payments, equal to 2.5 percent of the country's economic output.
The IMF has also urged Argentina to raise utility rates, bring its investment laws up to international standards and develop a policy for its central bank to control inflation. President Eduardo Duhalde has found it difficult in the run-up to new elections to get support in the country's legislature for the changes.
Earlier this week, the IMF announced the second instalment of a record $30.7 billion loan package for Brazil which the IMF designed effort to insulate South America's largest economy from neighboring Argentina.
The $3.1 billion loan for Brazil was approved a week after Brazilian President-elect Luiz Inacio Lula da Silva traveled to Washington for a get-acquainted meeting with President Bush
While financial markets had worried that the new government of the leftist Silva might decide to follow Argentina's lead and default on Brazil's massive foreign debt, Silva has sought to reassure foreign investors that he intends to follow prudent economic policies. Argentines Mark Deadly Riot Anniversary
Argentines Mark Deadly Riot Anniversary
Pounding drumbeats and shouts of "Throw them all out!" echoed throughout Buenos Aires on Friday as thousands of Argentines took to the streets one year after deadly riots plunged the country into a deep economic crisis.
Large groups of the unemployed and the impoverished threw up road blockades, shattered windows and set tires afire in a show of anger over the financial turmoil that toppled former President Fernando De la Rua on Dec. 20 last year. The 2001 riots resulted in 27 deaths.
Friday's anniversary revived the anger and despair many Argentines still feel over their rapid descent from one of the region's most prosperous nations.
"I'm losing hope that things will change," said Norma Grodam, a 50-year-old cook who has been out of work for two years.
Hundreds of protesters lingered in the plaza until the night, shouting insults at politicians and singing the national anthem. Hundreds more gathered outside of Congress, where authorities had evacuated staff earlier in the day because of security concerns.
After a year of economic turmoil, Argentina remains mired in the worst fiscal crisis in its history. The country has defaulted on foreign debt and endured a painful devaluation that slashed the peso's value against the dollar by 70 percent. One in five Argentines in the work force is unemployed.
The protests, which began Thursday, also triggered renewed attacks against banks and privatized companies that for many here represent a root cause of the problems in South America's second-largest economy. Homemade bombs exploded outside a bank and an office of the Spanish-owned telephone company Telefonica early Friday, shattering windows but causing no injuries.
Throughout the city, many supermarkets covered their storefronts with sheets of wood as police in riot gear took up positions in an effort to prevent a repeat of the looting and violence that wracked Argentina last year. The U.S. State Department urged American citizens to avoid downtown Buenos Aires on Friday.
President Eduardo Duhalde pleaded with Argentines to put the tumultuous year behind them, insisting the faltering economy was finally showing new signs of life.
"Argentina is still struggling with a very difficult situation, but we will soon put this all behind us," he said.
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