MercoPress. South Atlantic News Agency

Argentina and IMF “very close”.

Argentina is virtually “very close” to a new agreement with the International Monetary Fund, IMF and any “misunderstandings” are related to the fiscal surplus, public utility rates and bank compensations said cabinet Chief Alberto Fernandez.

"We want to reach an agreement, obviously it's not good for Argentina not to honour its commitments", indicated Mr. Fernández who said the target was to find a sustainable road "so we can grow and pay".

Mr. Fernández admitted that the budget primary surplus is one of the points still under discussion, "Argentina proposed 3% of GDP for 2004", since "with this target we can also honour our internal commitments".

"We need to grow but this not only means economic development but social sustainability for Argentina, remember one out of two Argentines is poor".

Mr. Fernández insisted that in no moment Argentina suggested it was not willing to repay, "but first we must grow so we can honour our commitments, and not the other way round".

Regarding the controversial issue of public utilities rates, demanded by the privatized companies, mainly European, Mr. Fernández argued that "unbelievably they are on the table when from an objective point of view, they have nothing to do".

"We're not imposing rates so companies loose money, but we are trying to review companies finances and contracts to ensure rates render a legitimate level of profits and not the opposite".

Over the weekend while visiting Comodoro Rivadavia President Nestor Kirchner emphasized that his administration was acting from a "national dignity" position in discussions with the IMF, and stated that "IMF must restrain from lobbying for certain corporate groups", in direct reference to the public utility rates debate.

During a recent trip to Europe Mr. Kirchner claimed before Spanish businessmen that private foreign corporations in Argentina had been earning profits only comparable to speculative risk capital operations.

Mr. Kirchner also indicated that "the banks are squeezing us a bit because they are after improper compensations". With the collapse of the Argentine economy in late 2001, plus the devaluation of the currency and the default, banks, depositors and bond holders lost billions of US dollars.

Finally Mr. Fernández rejected rumours that questioned the continuity of Finance Minister Roberto Lavagna who has been the architect of the Argentina recovery since mid 2002.

"Under no circumstances and at no moment has Mr. Lavagna' continuity in the job or his ministerial standing questioned", underlined Mr. Fernández.

Argentina faces an IMF repayment of 2,9 billions US dollars Tuesday September 9 and both sides are trying to avoid a confrontation if no understanding is reached by then.