MercoPress. South Atlantic News Agency

Reforms expected from Argentina.

Even when prospects for a long term agreement (three years) between Argentina and the International Monetary Fund, IMF, with blessings from the United States government, are encouraging the country still must comply with an agenda of “absolutely imperative structural reforms”.

That apparently was the message Argentine Economy Minister Roberto Lavagna brought back from his latest trip to the US where he met IMF officials and US Treasury Undersecretary for International Affairs, John Taylor.

According to the Argentine press, the Bush administration considers that the political transition in Argentina is over and a sustainable program must be drafted including at least nine fundamental points that must be addressed.

Above all renegotiation of the debt which Argentina defaulted in December 2001 and which involves over 70,000 private bond holders. Argentina argues it has begun working through the French bank Lazard Freres that was specifically contracted and with Finance Secretary Guillermo Nielsen who has contacted US and European bond holders. However the official line from Buenos Aires is that "to be able to pay, Argentina must grow". Groups of bondholders have also begun legal action against Argentina.

Restructuring of the Argentine banking system, making it smaller, more efficient and significantly reducing government held institutions.

Fiscal reform to encourage investment and impede tax evasion and elusion.

Fiscal reform at province level. IMF and the US Treasury point out that considerable budget savings have been achieved at national level but insufficient at provincial administration, which anticipates a political confrontation.

Elimination of the different currencies, bonds and quasi money created by the provincial governments when they were cash strapped. IMF insists in a legal framework to impede a similar situation arising.

Restoring creditors rights which means particularly an end to moratoriums in the mortgage market as currently occurs.

Full enforcement of the bankruptcy and business failure legislation.

Reforming public utilities and restoring full validity of private contracts between government and privatized services.

Finally, liberalization of Argentine foreign trade, making market access more fluid and less cumbersome.

IMF and the US Treasury have made it clear that the reform package can't be fully implemented all in one, but they do demand a detailed program of the changes and a timetable for its fulfilment.

"It's a long list, and a challenge, but we anticipate and wish that the international community will be patient giving president Kirchner administration's sufficient time to face the challenges that in the long term must all be addressed", indicated Ms. Heidi Cruz, the US Treasury advisor on Argentine affairs.

"We're confident the new administration will have the sufficient political consensus to make the reforms possible", said an IMF source in Washington.