MercoPress. South Atlantic News Agency

IMF considers Argentine payment deferment.

The International Monetary Fund will consider this Friday Argentina's request to defer until December a billion US dollars in payments which become due next Monday. This Wednesday Argentine Finance Minister Roberto Lavagna will be presenting Congress the 2005 budget, an element described as “crucial” for the IMF decision making process.

Last August the Argentine government decided to suspend negotiations with the IMF until the end of the year and concentrate in the restructuring of its 2002 defaulted debt with private creditors which together with interests stands almost at 100 billion US dollars.

Last week IMF Managing Director Rodrigo de Rato described the deferment request as something "normal" with many country members, and did not discard its approval. Next Monday September 20 Argentina must reimburse 292 million US dollars.

However Mr. Rato also anticipated that the consideration of the matter will be influenced by "important decisions in the budget field" which Argentina must contemplate for the coming fiscal year.

Mr. Rato was referring to the primary budget surplus which IMF recommends equivalent to 4% of GDP, although the President Kirchner administration has insisted that it will stay put in 3% of GDP like this year, fearing that a greater amount might derail the current recovery of the Argentine economy. IMF has insistently suggested that an improved surplus will make negotiations with private creditors holders of defaulted sovereign Argentine bonds more constructive.

Argentina has offered to pay the bonds with a 75% cut and has promised to issue 40 billion US dollars in new bonds to replace the defaulted ones. But creditors organized in the Global Committee of Argentine Bond Holders, (GCAB), have consistently rejected the Argentine proposal demanding higher interest rates and lesser cuts.

"Argentina's numbers don't work, but even without substantial changes we could manage a transition: our numbers are not that different", Hans Humes one of the organizers of GCAB told the Buenos Aires press over the weekend.

Mr. Lavagna quickly replied saying that "after so many aggressions, bond holders have been a bit too late in sending a conciliatory message. As we have said so many times, markets will have the final word: the offer stands and whoever feels it's convenient will take it. In a capitalist economy markets have the last say".

GCAB which allegedly represents 37 billion US dollars in defaulted bonds, most of them individual holders, has warned that if the Argentine government refuses to negotiate, "we will be forced to take the matter to the international court".