MercoPress. South Atlantic News Agency

IMF chief suggests Argentina pays Paris Club “in one shot”

Strauss-Kahn: The new government needs to improve its inflation measurements

The International Monetary Fund hopes Argentina and the Paris Club will reach a repayment deal on 6.3 billion US dollars in defaulted debt without the IMF involvement, said the IMF managing director.

"I hope we will be able to find a solution, and this is much more in the hands of the Paris Club than in mine, which will not involve the IMF at all" Dominique Strauss-Kahn told reporters in Buenos Aires in a Monday interview and released for publication Tuesday. Strauss-Kahn was in Argentina to attend the inauguration of President Cristina Fernández de Kirchner and to meet with her and other new government officials. He said Argentina does not want the IMF to play a role in its debt talks with the Paris Club of creditor nations for "historical reasons," which he said he completely understands. Many Argentines blame the IMF lending practices for exacerbating a deep economic crisis in 2001-2002. Under current Paris Club rules, a debt restructuring would require that Argentina sign up to an IMF program, which Buenos Aires is unwilling to do after paying off its IMF loans last year and freeing itself from politically unpopular audits. When asked about Argentine media reports that the Article IV review of IMF members' economies could be used to facilitate a deal, Strauss-Kahn said: "I'm prepared to do my best to help Argentina ... but never in the past has the Article IV been considered by the Fund as a program, and there's no reason to change." He said the IMF would become involved in the stymied discussions if the Paris Club sought its approval of a rescheduling plan agreed with Argentina. Strauss-Kahn said he had talked to the Paris Club about the importance of resolving the debt issue to help Argentina benefit from export credits and attract the foreign investment its economy needs to keep growing. He said some Paris Club officials may think the simplest solution would be for Argentina to repay the Paris Club "all in one shot" using its hefty foreign reserves, but he said there are many ways to reach a deal -- adding that the size of the debt is not so great as to be irresolvable. On the issue of inflation, Strauss-Kahn said Argentina's new government needs to improve its inflation measurements since "obviously, for reasons everybody knows, the official index doesn't reflect exactly the way it goes". But he also said he wasn't pressing officials on this or any other economic policies since they need time to settle in. Argentina's annual inflation rate is 8.5%, according to the INDEC national statistics institute. However, most private analysts accuse the government of fudging the figures and put real inflation at between 15 and 20%. President Fernández has denied any government tampering. In broader comments, Strauss-Kahn said he hoped to organize a regional conference early next year among Southern Cone countries to encourage more dialogue on economic experiences, both good and bad. If this model worked, it could be expanded to other regions such as the Middle East and Africa. Strauss-Kahn said to get such a project off the ground in South America, he has had to work toward "warmer relations" with presidents who have criticized the IMF. "This is part of the renewal of the relationship I want to have with Latin America, but there may be more difficult clients than Argentina," he said.