MercoPress. South Atlantic News Agency

IMF approves second review

The Executive Board of the International Monetary Fund, IMF, approved this Monday the second review of the three year stand-by agreement with Argentina.

The approval means the IMF will transfer 3,1 billion US dollars equivalent to the payment made last March 9 helping Argentina restore the level of international reserves.

Contrary to what happened in January when the first review this time there were no abstentions particularly from the Group of Seven most Industrialized countries, G 7, Germany, Canada, US, France, UK, Italy and Japan. Last January eight members of the IMF Executive Board, including Italy, Japan and UK, abstained claiming Argentina was not acting constructively in negotiations with private creditors, holders of defaulted sovereign bonds valued in 88 billion US dollars.

Allegedly G 7 favoured giving Argentina sufficient breathing space to address the coming negotiations with private creditors.

The dispute with bondholders follows Argentina's unyielding offer to repay with a 75% face value cut while creditors are demanding at least 65 US cents per dollar.

However the letter of intent attached to the second review request approval indicates that President Nestor Kirchner administration will be meeting the different groups of bondholders including Nicola Stock from the Committee of Global Creditors which Argentina refused to receive claiming it was only representative of a small percentage of bondholders.

The idea is that between June and August when the third review process with the IMF, Argentina will be ready to offer an exchange of bonds to defaulted bond holders. For that negotiation Argentina will have a syndicate of international banks advising on the operation including Barclay's, Merrill Lynch and UBS for foreign creditors and domestic banks Nación, Galicia and BBVA-Francés for Argentine bondholders.