MONTERREY, March 23: The Argentine government and International Monetary Fund reached an agreement on Friday for return of a lending agency delegation to the country to evaluate its troubled economy and explore the possibility of renewing loans.

The team will travel to the country in April, President Eduardo Duhalde and IMF chief Horst Koehler said Friday at an international development aid conference in Monterrey, Mexico.

The relationship between the IMF and Argentine government has been strained lately after the South American country defaulted on 141 billion dollars worth of loan payments. But in a statement, Duhalde and Koehler said the meeting was “cordial and profitable”, and they pledged to continue working together.

The news of the agreement did not stave off a plummeting peso on Friday, as the currency closed at 3.10 US dollars in exchange banks - a plunge of 19 per cent from Thursday. The drop sparked fears of the hyperinflation that gripped the nation in the early 1990s.

The peso has lost 67 per cent of its value since the currency was floated in January after having been artificially pegged 1-1 to the greenback since 1991.

Since defaulting on the debt in December, Argentina has been struggling to regain international investor confidence and renew loans from the IMF.

The country has been in an economic recession for four years and faces an unemployment rate of about 22 per cent. It is seeking 20 billion dollars in fresh loans.

The IMF has recently praised Argentina’s efforts to stabilize the economy, but said more needs to be done to ensure its new economic measures cannot be challenged in court.

The Duhalde administration has kept in place highly-unpopular bank withdrawal limits, slashed government spending, and reached an agreement with provincial governments eliminating a previously set minimum on federal tax revenue payments to the provinces.

The president of the World Bank, James Wolfensohn, said at the conference on Thursday the bank was willing to help Argentina once it reaches an agreement with the IMF.—dpa