Argentina fails to make a US$680 million payment

Argentina a US$680 million payment due to the Inter-American Development Bank, but expected only a brief delay in repaying the money, the lending institution said.

Argentine informed the bank, which supports development projects in Latin America, on Wednesday that the country could not meet the deadline because of ``technical issues'' involved with the operations of its central bank, the development bank said in a statement.

Argentine Economy Minister Roberto Lavagna was quoted in the statement as saying he expected the "delay will be brief" and would be resolved "in the framework of broader refinancing agreements" with other multilateral lending institutions.

In Buenos Aires, Lavagna repeated the government's insistence that it will not make any further debt repayments until it reaches a deal on a transitional loan with the IMF.

Lavagna reporters that reports suggesting Argentina would use its reserves to pay around US$2 billion of loans coming due to the IADB, the World Bank and the IMF this week even if it didn't have an agreement on new loans from the IMF were false.

The IMF sent a negotiating team to Buenos Aires last week to try to arrive a quick agreement on short-term loans the country needs to keep defaulting on its obligations to the IMF -- an action that would cut off its last resource for foreign support.

For most of last year, the IMF rolled over Argentine loan payments that were coming due, but under IMF rules it cannot do that for a second year. The short-term IMF loans are expected to provide the country with the resources to help it meet its obligations to multilateral institutions until after scheduled presidential elections this spring.

In December 2001, the IMF refused to extend further loans to Argentina, forcing the country to default on the bulk of its US$141 billion in foreign debt. It was the largest government default in history.

Since then, the IMF and Argentina failed to agree to terms for new loans. The Argentine government has complained that the IMF is being too tough in its demands for economic reforms.