MercoPress. South Atlantic News Agency

IMF-Argentina, friends but?

International Monetary Fund Managing Director Horst Koehler announced in Buenos Aires that the multilateral credit organization was working in a medium term agreement with Argentina.

However, Mr. Koehler also demanded "a new fiscal framework and greater judicial certainty", and a restructuring of the foreign debt "in contact with creditors". "We're working in a three year program, not in the short term or the renewal of the current program that expires next August 31". An IMF team is arriving in July to review the current agreement and prepare the next program.

Mr. Koehler who arrived in Buenos Aires this Monday to meet with President Nestor Kirchner and his new administration admitted the IMF underestimated Argentina's recovery capacity, and is reviewing its policy towards the country, but also warned "that it's not in the interest of Argentina to blame IMF for all of its problems". "Argentina must insist and expand its reforms", even "when the IMF recognizes they can't be done in six months".

Mr. Koehler said the Argentine economy was recovering faster than expected by the IMF but in the last few months' growth has moderated and "this reminds us of the need to find a way to consolidate sustained expansion in the medium and long term".

IMF Managing Director identified three main areas that need advancing, "a medium term fiscal framework to improve inter-government relations; a strategy to improve the connecting process between depositors and investors; and a judicial and institutional reform so Argentina becomes attractive to foreign investors".

During his visit Mr. Koehler met with political leaders, members of Congress, provincial governors, social and religious organizations, businessmen, Finance Ministry and Central Bank officials and shared several meals with President Kirchner.

"I have a better comprehension of the Argentine situation, and conversations with President Kirchner have been very good", said Mr. Koehler. "Any program must combine free markets with a vigorous, sustained growth plus social equality, because that's the formula for social and political stability and prosperity for Argentina".

Mr. Koehler stressed that he was very impressed with president Kirchner "and his vision" that will lead Argentina to a vigorous growth and greater social cohesion, for which "I'm convinced he will receive ample support".

Nevertheless President Kirchner made it clear that he's not willing to sign any agreement with the IMF if this means further sacrifices for the Argentine population. Mr. Kirchner also recalled that for years the IMF had chosen former president Menem "as a show case, and we know how it all ended".

Mr. Koehler travelled to Argentina with the Director for the Western Hemisphere Anoop Singh; IMF representative in Argentina John Dodsworth; Director of Foreign Relations Thomas Dawson and Siddarharth Tiwari, expert in monetary affairs.