MercoPress. South Atlantic News Agency

IMF extends Argentina's repayment expectations

The Executive Board of the International Monetary Fund (IMF) approved Wednesday a one-year extension of Argentina's repayment expectations to the IMF arising between May 20, 2005 and April 28, 2006 in a total amount equivalent to SDR 1.68 billion (about US$2.50 billion).

The repayments will fall due on an obligations basis exactly one year after the dates on which these repayment expectations arise.

The IMF policy on repayment expectations allows for extensions where the member's external position is not sufficiently strong for it to repay early without undue hardship or risk. The decision to approve an extension of repayment expectations is based on these technical considerations, and is not based on an assessment of the authorities' economic program. Many Executive Directors were looking forward to the opportunity to discuss Argentina's economic policies in the context of the upcoming Article IV Consultation Board discussion, which will be held soon.

In Buenos Aires Argentine Economy Minister Roberto Lavagna said "this is a further step in the negotiation process with the IMF; we're building brick by brick". The operation involves twenty two deferred payments between May 20 and April 28, 2006.

Last week IMF spokesperson Thomas Dawson confirmed the Argentine government request for an extension of repurchase expectations for the coming twelve months, which would have to been paid out of Central Bank international reserves given the delay in current negotiations. However Finance Secretary Guillermo Nielsen warned that the debt burden will need a sustained budget primary surplus which means "a great effort during decades". Mr. Nielsen's remarks were interpreted as a strong support for Minister Lavagna who earlier in the week criticized "populist pressures to expand government spending".

"Let's be clear, there's no room for increases by decree", highlighted Mr. Nielsen.