MercoPress. South Atlantic News Agency

Koehler arrives
in Argentina

International Monetary Fund Managing Director Horst Koehler will be arriving in Buenos Aires next Monday morning, where a long agenda of interviews and contacts awaits him plus a lot of convincing.

In an interview with the press Mr. Koehler said the purpose of his trip was "to better and deeply understand" the policies of the Nestor Kirchner administration and convince the president that the IMF has a "human face".

Mr. Koehler will be arriving with Anoop Singh Director of the Western Hemisphere Department, the IMF representative for Argentina John Dodsworth and Thomas Dawson Director of External Relations.

"I hope the President understands we're committed to listen and help", said Mr. Koehler adding that during his interview with President Kirchner he expects to talk about the future, not about the long term agreement Argentina and IMF are currently negotiating.

However Mr. Koehler pointed out that the model for the region was that currently implemented by president Luiz Inacio Lula da Silva.

"We relieve that a combination of a market economy plus social equality is the correct format for a better future. We have evidence of this in Brazil with President Lula. I think it could also work for Argentina", said Mr. Koehler

Among the issues still pending an understanding with Argentina are the Central Bank chart, reform of the financial system, co-participation system with the provinces and a "compensation" for the banks that were trapped by the country's massive default.

After two long years of turbulent relations with Argentina Mr. Koehler is particularly interested in personally assessing the country's economic standing, the political support for the crucial reforms that need to be addressed and the social situation for which he has scheduled interviews with religious and human rights leaders. Another significant meeting of the agenda will be with provincial governors, who in the past have repeatedly conditioned austerity and budget balancing decisions.

Before reaching Buenos Aires the IMF delegation will be stopping in neighbouring Uruguay where Mr. Koehler will congratulate Uruguayan officials for their successful voluntary restructuring of the country's foreign debt involving almost 6 billion US dollars.

However Mr. Koehler arrives after the IMF Executive Board completed the second review of Argentina's performance under a seven-month, SDR 2.17 billion (about US$3.1 billion) Stand-By Arrangement, which was approved on January 24, 2003. The completion of this review enables the release of an additional SDR 226.2 million (about US$320 million).

The Executive Board also approved Argentina's request for waivers of the non-observance of certain performance criterion, and of the applicability of fiscal quantitative performance criterion for end-May 2003. In the official release Mr. Koehler stated the following: "Favourable macroeconomic developments and the easing of political uncertainties linked to the presidential elections have been key to strengthening market sentiment in Argentina in recent months. The economy is recovering and inflation has decelerated sharply, allowing domestic interest rates to fall, while the peso has strengthened. A large trade surplus has allowed an increase in international reserves.

These signs of recovery are encouraging. But persistence in implementing structural reforms will be necessary to sustain the growth momentum. Therefore, in light of the progress that has been made so far, the Fund has approved completion of the second review under the Stand-By arrangement.

"The Fund looks forward to working closely with the authorities in developing a strong and confidence-building medium-term successor program that would sustain growth and reduce poverty. The forthcoming visit of the Managing Director will provide a good opportunity to exchange views with President Kirchner and his economic team on how to achieve these objectives".