MercoPress. South Atlantic News Agency

IMF-Argentina agreement

The International Monetary Fund, IMF, confirmed this Thursday in Washington that an agreement had been reached with Argentina, which will be considered by the multilateral financial organization board in the coming days.

"We can confirm that the IMF delegation currently in Buenos Aires and the Argentine government have managed an ad referendum agreement", said Tom Dawson IMF spokesperson.

Almost simultaneously in Buenos Aires the Ministry of Economy officially announced that the Argentine government had signed a letter of intent for an interim agreement with the IMF that will enable the country to reschedule debt payments due until August 31.

The last minute agreement means Argentina will be repaying 1,065 billion US dollars due this Friday, a decision that had both sides clinging, since Argentina already had defaulted in payments to the World Bank and the Inter American Development Bank.

Argentine caretaker president praised the IMF "good attitude", for having understood that at "this moment of stability it's essential we preserve our reserves".

Mr. Duhalde also revealed that the agreement was constricted to August since it was "not possible" to have the presidential hopefuls, for the coming April 27 election, commit themselves. Argentina's newly elected president will be taking office May 25.

"They (IMF) wanted all candidates to support the agreement, but this was not possible", indicated president Duhalde.

According to the Argentine government the January-August agreement involves 6,6 billion US dollars coming repayments to the IMF, which added to the 5,1 billion already rescheduled in 2002, add up to 11,7 billion US dollars.

The documents that still have to be considered by the IMF Board of Directors are the "Memorandum of Economic Policies of the Argentine Government for a transition program in 2003", and a "Technical Understanding Memorandum".

The Duhalde administration had consistently argued it was unable to make repayments because of the limited international reserves held by the Central Bank and previous understandings with the IMF that demanded a minimum level of reserves.

In the middle of a serious political crisis and street rioting, with five presidents in ten days, in December 2001, Argentina defaulted in its privately held bonds (an estimated 128 billion US dollars, probably the largest in history). Last December the country failed to repay a World Bank loan, (although it did honour interests) and this week something similar occurred with the Inter American Development Bank.

Once an agreement is finally signed with the IMF, Argentina is expected to honour all debts, pending and future, with multilateral organizations, the only credit source of the country.