MercoPress. South Atlantic News Agency

Argentina discussing new conditions with IMF

Argentina requested the International Monetary Fund, IMF, an extension of repurchase expectations for this year, revealed IMF's spokesperson Thomas Dawson.

The request was done by the head of the Argentine delegation, Finance Secretary Guillermo Nielsen, currently in Washington discussing with IMF officials Argentina's economic policy and performance.

"The report has to be drafted and submitted to the Executive Board", before it can further advance, "but there's no date, as yet, for the Board meeting", said Mr. Dawson.

Argentina's repayments to IMF this year total 1,45 billion US dollars and the coming operation involves 140 million US dollars next May 20. So far this year Argentina has repaid over 400 million US dollars to IMF.

However since the swap of Argentina's defaulted debt involving 81 billion US dollars remains suspended in a New York court, President Nestor Kirchner and Economy Minister Roberto Lavagna decided to reschedule, when possible, this year's repayments to multilateral organizations, particularly since a new agreement with the IMF is not expected to be ready until next August.

Actually Mr. Dawson admitted the possibility of a new IMF-Argentina stand by agreement "step by step", but the current priority is finishing the annual IMF review of the country's economic and financial performance.

Argentina so far has managed a comfortable primary budget surplus which in the first six months of 2005 will have reached the equivalent of 75% of the whole year's target. But the second half is not so promising for three reasons according to Economy Ministry sources: repayments of debt are expected to begin, the energy shortage could have an impact in the economy's performance and will demand fuel imports, and finally mid term elections are scheduled for next October.

President Kirchner has been describing the coming elections as a referendum on his administration and an old pensions' hike is anticipated before the crucial vote.

On the bright side the government this month successfully floated a one billion Argentine pesos bond (approximately 350 million US dollars) and next week the Venezuelan Development Bank will be purchasing 150 million US dollars in Argentine bonds, which marks the return of the country to money markets after several years' absence following the 2001/02 default.

"With these operations we can reach the end of August with a greater margin" said an Argentine source, however given the October commitments it will be hard to comply with IMF wish of a "3 to 4,5% budget primary surplus".

Apparently Economy minister Lavagna proposed IMF Managing Director a "conservative" 3% primary surplus in 2005, promising "all efforts to improve the index".