BUENOS AIRES, Sept 11: Argentina will postpone $21.6 billion in debt payments until 2006 under a deal reached with the IMF that gives the ailing South American country breathing room for its economic recovery.

The deal reached late Wednesday with the International Monetary Fund came hours after Buenos Aires defaulted on a $2.9 billion IMF debt payment, a move that could have cut off Argentina from key sources of aid and hurt efforts to restore investor confidence.

“This agreement with the IMF is an important step, but is not a panacea,” President Nestor Kirchner said on Thursday in a radio interview.

Argentina’s Economy Ministry said the deal would postpone until after 2006 repayments on $21.6 billion in loans from multilateral lenders. The arrangement includes no new loans, so the country’s total debt would not increase.—AFP