MercoPress. South Atlantic News Agency

Argentina attacks IMF loan delay

Néstor Kirchner, Argentina's president, yesterday attacked the International Monetary Fund for the second time in a week after the IMF suggested it would postpone a $330m (?268m, £188m) disbursement that had been expected before Christmas.

The conclusion of a review under Argentina's recent $12.5bn IMF agreement is being held up because the country has made insufficient progress in debt negotiations with its foreign creditors.

The package's delay until the new year is likely to force Argentina to make payments on its multilateral loans from foreign reserves.

Yesterday Mr Kirchner was unapologetic over his government's progress. "The international organisations are not going to twist my arm," he said at an appearance in Córdoba province.

But Buenos Aires will be under more pressure to demonstrate some flexibility in talks to renegotiate about $100bn of debt it defaulted on in December 2001.

In spite of universal outrage from creditors, the government has so far insisted that it will not improve its September offer of a 75 per cent reduction in the nominal value of the debt.

An IMF source confirmed yesterday that lack of progress was the main - but not only - cause of the delay. Fund rules state that a country that has fallen into arrears with its creditors must show good faith in restructuring negotiations.

The hold-up is further evidence that the relationship between the IMF and South America's second biggest economy is passing through a difficult patch.

"We will not accept any pressure, open or otherwise, to increase payments abroad," Mr Kirchner said in a summit of the Mercosur trade bloc in Montevideo on Tuesday.

"That could only be done at the cost of reducing growth."