MercoPress. South Atlantic News Agency

Gaining ground for January 28

While Argentine president Nestor Kirchner kept pounding against what he described as vested interests which are pressing the government for greater payments to the country's creditors, the president of the Argentine Central Bank addressing the Davos forum said that sovereign bondholders must accept a “great cut”.

Alfonso Pat-Gray declined to say how large a cut but rather insisted that the key issue was to work on a "viable repayments program which does not affect economic growth".

In a Buenos Aires rally President Kirchner, standing next to Buenos Aires province governor Felipe Solá, called former Argentine rulers "crooks" and condemned "vulture funds" in the hands of foreign speculators, "a combination of interests that rocketed Argentine foreign debt".

Mr. Kirchner addressing a crowd of future home owners built with government funds in metropolitan Buenos Aires underlined once again that the 75% cut on the face value of Argentine bonds, "was the only proposal possible to bondholders".

"Paying more overseas means paying with the sweat and toil of the people, not of bondholders but of those who work or don't have a job", stressed Mr. Kirchner adding that he stands with both feet next to the people, "not one this side and the other on the other side".

The Argentine president has been in an aggressive domestic campaign rallying support for his strong stand regarding limited payment of sovereign bonds, with eyes set on January 28 when the IMF is expected to approve the first review of the agreement signed last September with Argentina rescheduling most of its debt with multilateral credit organizations. If the review is approved next Wednesday Argentina will have reimbursement of 600 million US dollars.

However the good showing of the Argentine economy so far, and the overshooting of the primary surplus target agreed, has prompted the IMF to press for a review of the sovereign bonds 75% cut unilaterally decided.

Anne Krueger Deputy Managing Director of the IMF and described by the Buenos Aires government as "non sympathetic towards Argentina" and IMF spokesperson for Latinamerica Francisco Baker have so far refused to comment on January 28.

In spite of the significant expansion of the Argentine economy in 2003 and probably in 2004, there are some pending structural issues of the agreement reached with the IMF, namely, compensating banks for losses following the huge devaluation of the peso in December 2001; an end to the mortgage rescue plan and the sanctioning of a tough bill to combat tax evasion and elusion in Argentina, a kind of national sport.

President Kirchner has repeatedly said he will not appeal to international reserves to pay for IMF and World Bank credits since they are contemplated in the IMF agreement, but that is why reviews have become so crucial. Wait for January 28.