DUBAI, Sept 20: The International Monetary Fund approved an economic programme for Argentina on Saturday but four of the 24 executive board members abstained from voting, showing not all are happy with the deal, IMF sources said.
The medium-term plan charts a course for growth in Argentina and rolls over $12.5 billion owed to the fund, Francisco Baker, IMF spokesman for Latin America, said.
But IMF sources told Reuters four directors, including Europeans, abstained from voting to show reservations about the deal, which some critics have charged is too soft on Argentina.
Saturday’s board approval paves the way for the Latin American country to focus on reducing poverty and rebuilding an economy battered by a botched devaluation of the peso in January 2002 and a record sovereign debt default.
One of the main concerns for Europe is that thousands of individual European investors fear deep cuts to the face value of the Argentine bonds they hold when Buenos Aires formally launches negotiations next week to restructure $90 billion in outstanding obligations.
The IMF and Argentine struck their agreement earlier this month in Buenos Aires after tough negotiations between the fund and the new government of President Nestor Kirchner.
But some Group of Seven finance officials and economists have said the deal represented a cave-in by the fund and was “less than perfect”.
Full details of the new programme were expected to be released later on Saturday but the plan is believed to include a primary budget surplus target of three percent for the first year — lower than the goal economists thought was needed.
No targets have been set for 2005 and 2006.
Earlier on Saturday, US Treasury Secretary John Snow urged Economy Minister Roberto Lavagna during bilateral talks in Dubai to move swiftly on the debt revamp deal with private creditors.
A US official said Snow was told by Lavagna that Argentina planned to consult with creditors at meetings in October. A menu of options is expected to be presented to some creditors in Dubai early next week.
The US official also said Lavagna had told Snow that he now expected gross domestic product in Argentina would expand more than 6.5 per cent this year. That is well above the 5.5 per cent forecast by the IMF.—Reuters