Argentine Economy Minister Roberto Lavagna secured a pledge from the International Monetary Fund that it would begin to negotiate providing aid to his bankrupt country.
After holding back on aid for six months, the IMF promised Lavagna -- who pleaded his case with IMF and US Treasury officials in Washington this week -- that it would begin ``an active negotiating relationship.'' The talks will include ways to rescue the banking system, work out a government budget and establish safeguards to keep the central bank independent, the IMF said in a statement.
"We will pursue discussions actively in all these areas, including through staff missions to Argentina to accelerate momentum toward a fund-supported program," IMF Managing Director Horst Koehler said in a statement.
The Argentine economy has ground to a halt since the country defaulted on US$95 billion in bonds and ended a decade-old link of the peso to the dollar earlier this year. Lavagna said his country, which isn't paying its bondholders, needs US$18 billion to roll over debts due to Washington lenders this year and next.
Still, Lavagna appeared to fall short of earning a pledge of a specific date for a visit by IMF negotiators to Buenos Aires.
Lavagna, who has met with Koehler, Deputy Managing Director Anne Krueger and US Treasury Secretary Paul O'Neill, will extend his visit by one day to continue talks with the IMF and US, his spokesman Sergio Federovisky said.
Cabinet Chief Alfredo Atanasof said Friday that Argentina had already carried out all of the IMF's demands, and so deserves to win aid within the next month.
"Next week [an IMF] negotiating mission should come to complete the outline of an agreement," he said.
The problems in Latin America's fourth-most populous nation, which had its economy shrink 16 percent in the first three months of this year, have mounted this week, as anti-government protests turned violent, and police fired tear gas and rubber bullets to disperse the crowds. Two died during the protests.
Aid has been held up as the IMF complained of a lack of progress from Argentina on its pledges to curb provincial spending, and come up with a plan to rescue its banks.
Argentina assured the IMF of "substantial further progress" next week in securing getting provinces to cut spending.
The statement comes against the backdrop of signs of a widening gulf between Buenos Aires and the IMF.
Central bank Governor Mario Blejer, a 20-year veteran of the IMF and the fund's closest associate in the government, resigned last weekend, complaining that Lavagna wanted to dictate central bank policy.
"It is no secret that we had different positions over the level of autonomy of the central bank," Blejer said in an interview. "That has been obvious. The economy ministry tried to politicize the bank."
Part of the negotiations with the IMF will center on how "reinforcing central bank independence," the fund said.
The IMF warned the country to stop spending reserves to prop up the peso, and advised against the strategy the country adopted for restoring faith in its banks.
RSS