MercoPress. South Atlantic News Agency

Cavallo blames the IMF for Argentine crisis.

Former Argentine Economy Minister Domingo Cavallo said that International Monetary Fund, IMF, policies are to blame for Argentina's 2001 devaluation followed by the massive default of its foreign debt.

Mr. Cavallo who was Economy Minister under president Carlos Menem and later with Fernando De la Rúa added that the current rescheduling agreement reached with the IMF "only benefits the IMF, Argentina and its creditors are big looser".

Interviewed by the Brazilian daily Folha do Sao Paulo, Mr. Cavallo who is currently a visiting lecturer for the Economics Department of Harvard University in the US argued that it would had been more beneficial "if the IMF had committed fresh funds for Argentina and had admitted a reduction in the debt and longer maturities".

Mr. Cavallo who masterminded the Convertibility System in Argentina establishing a one peso-one US dollar parity that lasted for a decade from 1991 to 2001, insisted that the devaluation of the Argentine peso was "a huge mistake", and rejected criticisms to the fixed exchange parity model.

"Convertibility was not responsible for the crisis. It was over spending by the central government and provinces that borrowed money in excess and beyond reason. And obviously the IMF is also responsible for having contributed to this situation, Argentina would not be faced with this scenario if the IMF had acted on time to impede such massive indebtedness", underlined Mr. Cavallo.

Regarding the current debt rescheduling proposal made by the president Kirchner administration to holders of defaulted bonds in Dubai, Mr. Cavallo said he would make no comments "since I have not had access to details and I'm not interested in talking about the Argentine government decisions".