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Argentina Official: IMF Accord Near  

 


By: Laurence Norman
The Washington Post, March 13, 2002

 

Buenos Aires, Argentina Argentina's Economy Minister Jorge Remes Lenicov said late Wednesday his government was within reach of an accord with the International Monetary Fund on much-needed financial aid.

Argentina is thought to be seeking a $25 billion from the IMF in order to prop up its troubled financial system and help the economy move out of a four-year-old recession.

An IMF team arrived in Buenos Aires last week to undertake a fact-finding mission, which has included talks with President Eduardo Duhalde, and his ministers, provincial governors and union leaders.

During an interview with Argentine television channel Tele Noticias, Renicov admitted differences between Argentina and the IMF remained, but said he was confident an agreement would soon be reached.

"There are some points on the agenda that need discussing," he said, adding however that "in 70 or 80 percent (of things), we are near an agreement. I am not considering the possibility that there will not be an accord with the Fund."

Talks so far between Anoop Singh, the leader of the IMF mission and Argentine authorities have been described as friendly but tough.

IMF officials have repeatedly stressed they will only extend fresh aid if the government has a sustainable plan in place to deal with an economic collapse that has seen Argentina default on its $141 billion public debt and the millions turned into poverty.

The Fund and other multilateral lenders cut off financial aid to Argentina last December, after it became clear Argentina would not meet its promise to run a balanced budget.

During Wednesday's interview, Remes Lenicov also repeated Duhalde's recent prediction the economy would turn around in the coming months.

"A number of facts are coming together that will allow us to pick up from July," he said.

The government has predicted the economy will shrink by 4.9 percent this year. However private economists and the Fund themselves are said to think the decline will be considerably deeper.

Lenicov was also sounding confident that the peso, whose value has plummeted recently against the dollar, would grow stronger.

"The dollar is very high and I believe that in the immediate future, that is going to change," he said, saying that a pick up in exports should help lift the peso's value.

The local currency, which was pegged 1-to-1 to its U.S. counterpart for 10 years, was devalued in January. On Wednesday, $1 was selling for 2.4 pesos, below its value Tuesday, thanks to the intervention of Argentina's Central Bank.

As the pesos' value has sunk, prices have risen, raising the scepter of hyperinflation here. However the minister promised the government would keep in place tight monetary and fiscal policies to prevent this.

Remes Lenicov also said Argentina would start renegotiating its debt obligations with foreign creditors when the government had an internationally backed economic plan in place.

He said to undertake talks with creditors beforehand would "lack credibility."


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