MercoPress. South Atlantic News Agency

Argentina upbeat over IMF meeting

Top Argentine officials will travel to Washington on Monday night to begin face-to-face talks with the International Monetary Fund over a new programme.

It is a crucial mission for South America's second largest economy. President Néstor Kirchner's administration admits that an IMF programme is essential to meet its financing needs this year.

In spite of the country's record $100bn sovereign debt restructuring in February, performing debt remains above 70 per cent of gross domestic product, and large chunks of its multilateral and domestic debt mature this year.

Guillermo Nielsen, who will lead a four-day mission from Argentina's economy ministry, has expressed optimism about this week's meetings. In a radio interview on Thursday, he said discussions were already "at an advanced stage" and that the two sides had been "swapping documents, drafts, in some cases very advanced draft chapters".

Argentina is pushing for a new programme to allow it to roll over all or most of its existing obligations to the fund. In addition, government officials told last week that it wanted a "lite" agreement with macroeconomic targets but little or no obligations on structural reform.

They also said they would like it to run for three years, although many analysts say a one-year agreement is more likely.

The current agreement was suspended last year after the country began to slip on several structural targets, including fiscal and banking reform, as well as agreeing new contracts with the private companies that provide public services.

On the macro side, at least, things look good - Rodrigo Rato, the fund's managing director, spoke favourably of Argentina's impressive economic recovery since December 2001.

Mr Kirchner's administration announced last Monday that April tax receipts grew more than 30 per cent compared with last year, reinforcing expectations about the country's hitherto strong fiscal performance. Inflation, meanwhile, was just 0.5 per cent in April compared with 1.5 per cent for March.

Yet despite Argentina's cautious optimism, the fund is unlikely to back down on the structural issues.

One unresolved problem concerns private creditors holding about $20bn in debt that was not tendered in the recent swap. The fund has demanded Argentina come up with "a realistic strategy" for dealing with these "hold-out" investors.