WASHINGTON, Oct 10: The International Monetary Fund said on Thursday it had made progress in talks over restarting aid to Argentina and was hopeful a deal can be reached that would resolve outstanding differences.
IMF spokesman Tom Dawson told a regular news briefing the two sides had made headway on resolving differences related to Argentina’s budget and other issues, but that more remained to be done on working out a monetary anchor and on how best to resolve a freeze on bank deposits.
“It is fair to say...that we have had good discussions and made some progress,” Dawson said. “We are still hopeful we can work something out.”
Dawson declined to comment on whether Argentine Economy Minister Roberto Lavagna might travel to Washington or the IMF’s chief negotiator Anoop Singh might head to Buenos Aires to try and bring the talks to a conclusion.
Argentina wants to wrap up talks and seal a deal to restart IMF aid before Nov. 9 when it could default on loans with other multilateral lenders. The troubled country, which was cut off from IMF aid last December for broken promises, wants to stay current with multilateral lenders so it can continue to receive loans for social programmes and to battle poverty.
For two weeks, an Argentine delegation has been quietly working with IMF staffers here, hammering out an agreement that would restart aid. The current round of talks are set to end on Friday when Argentine Finance Secretary Guillermo Nielsen plans to return home to try and tie up loose ends.
The deal being worked out with the IMF would run through the end of 2003 and roll over debts owed to the fund, the World Bank and the Inter-American Development Bank, sources on both sides of the talks said. It could also give $1 billion to provincial governments so they would no longer be forced to issue bonds to cover their deficits.
Between now and the end of next year, Argentina owes the IMF alone more than $11 billion in loan repayments. When debts to the World Bank and IADB are included, Argentina’s obligations in the coming year are even steeper.
In January this year, Argentina defaulted on its $140 billion foreign commercial debts — cutting it off from international bond markets. But vitally needed loans for social programmes in the increasingly chaotic economy continued to flow from the World Bank and others.
Next week, Argentina faces more than $1 billion in payments — an $809 million World Bank loan payment and $250 million on a World Bank-guaranteed bond. But Buenos Aires has said its foreign reserves are too low to be used for the payments, making an IMF accord vital to keeping aid flowing.
If Argentina were in default with multilateral lenders, loans to battle poverty would dry up. Restructuring bonds with creditors would become almost impossible.—Reuters