The IMF said it is considering a short-term loan program for Argentina to help the country recover from an economic tailspin caused by the largest debt default in history.
The IMF, which cut off Argentina from lending last December, may complete negotiations on the new aid next month, the US Treasury said in a separate statement. That would lead to Argentina's first infusion of capital since rioting protesters toppled former President Fernando de la Rua a year ago yesterday.
A loan is "a first step on a long road to getting back to normal relations with private creditors," said Carl Ross, managing director for emerging market research at Bear Stearns & Co in New York.
In its four-paragraph statement, the fund didn't say how much aid it is considering or when the money could be approved by its board. The IMF said the loan would be used only to repay money to the fund, the World Bank and other government-backed lenders.
The aid is intended to help stabilize the country in the run- up to the presidential election, scheduled for April 27, Treasury said. In addition, "the international community will continue to work with Argentina to develop a longer-term program geared toward restoring a path to sustainable growth," the US said.
They haven't been able to complete an agreement, and many analysts had predicted President Eduardo Duhalde wouldn't be able to pry aid from the fund before he leaves office.
Tonight's announcement was made after the IMF came under pressure to reach a deal from Spain and the Inter-American Development Bank, the largest lender to Latin America.
IDB President Enrique Iglesias traveled to Buenos Aires this week in an attempt to bridge differences between Economy Minister Roberto Lavagna and the IMF.
Argentine officials had complained that the fund was nitpicking and needed prodding from political leaders before it would reach an accord.
The aid package would enable Argentina's current government to avoid falling further into arrears on debt to the IMF and World Bank. Argentina owes US$8 billion to Washington lenders next year.
Argentina has already defaulted on US$1.8 billion owed to the World Bank and Inter-American Development Bank.
Argentina on Jan. 17 owes the IMF US$980 million, and many analysts had warned that defaulting to the IMF would mean Argentina wouldn't be able to swap its defaulted bonds and access private capital again for years, and that may lead to a return to hyperinflation.
"The creditors see before them the messiest restructuring they've ever seen," said Peter Allen, a consultant to the Argentina Bondholders Committee, a group of holders of Argentine debt. "Default to the [IMF] only makes it worse."
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