MercoPress. South Atlantic News Agency

G7 concerned with Argentina

G 7, the seven richest countries of the world group is concerned with the postponement until December of the third Argentina-IMF review fearing it could further delay the restructuring process of the defaulted Argentine sovereign debt according to G 7 sources.

"In G 7 corridors there are fears that the postponement of the IMF review will actually not help Argentina to reach an agreement with the defaulted sovereign bond holders, rather make the restructuring process even slower".

Argentina pending sovereign debt involves almost 100 billion US dollars, with interests, defaulted in January 2002, which supposedly should be agreed and solved by the end of 2004. However the Argentine proposal to private creditors to exchange defaulted bonds for new bonds equivalent to 40 billion US dollars was rejected.

Argentine recently argued that given IMF delay in approving the third review of the 13 billion US dollars agreement scheduled for last July, it was decided to postpone it until next December, which apparently was consented by IMF.

Last week US Treasury Under Secretary John Taylor said Argentina should take advantage of the third review postponement to reach an agreement with its creditors.

"It's the opportunity to negotiate with creditors and reach a good solution, which is in the interest of Argentina and the global economy", stressed Mr. Taylor.

IMF Managing Director Rodrigo de Rato is scheduled to visit Argentina next week, and according to G7 and IMF reliable sources he will request the President Nestor Kirchner administration "to retake a credible reform path". Although most economic indicators of the IMF stand by agreement are favourable, Argentina still has some structural reforms pending under discussion in Congress.

Tax revenue in the first half of 2004 overshot the whole annual target agreed with the IMF and Argentine Economy Minister Roberto Lavagna forecasted that exports would reach a record 33,5 billion US dollars in 2004 breaking the 26 billion US dollars stagnation that persists since 1997. Employment is also growing according to the latest official release: 0,4% in July and 6,8% compared to July 2003. Unemployment in Argentina now stands at 14,4% of the active population a significant change from the same period in 2003 when the index was 17,8%.. "The process of destruction of jobs has ceased and job creation is strengthening", said Labor Minister Carlos Tomada who underlined that 39% of the new jobs in the last twelve months were created by industry. But even with these encouraging data over 60% under 14 years in Argentina live below the poverty line according to the latest release from the Statistics and Census Office which covers the second half of 2003. Two out of three under 14 are poor because their parents lack sufficient income to pay for basic needs, says the report, totalling six million children.