The International Monetary Fund gave formal approval on Friday for an additional US$8 billion in loans to help Argentina steady its troubled economy.
The agency's 24-member executive board endorsed the recommendations made on Aug. 22 by IMF Managing Director Horst Koehler for new loan resources to help Argentina as it struggles to avert defaulting on its massive foreign debt.
PHOTO: AP
In a brief statement, the IMF said that US$6.3 billion in new loans would be made available immediately with another US$1.2 billion loan provided before the end of the year.
The additional US$8 billion in funds brings to nearly US$22 billion the amount the IMF is making available to Argentina as it tries to implement economic reforms and emerge from a steep recession.
Officials in Argentina hope the IMF endorsement of its economic reform program will convince its creditors that it will be able to meet payments on its US$130 billion in foreign debt.
Koehler's announcement of the additional support last month, which was contingent on approval by the IMF's board, triggered a rally in Argentine financial markets, bringing down interest rates for the country's debt.
Before the turnaround, Argentine's troubles had sent shockwaves through other financial markets in the region, raising the specter of another Asian-style currency crisis in which debt troubles in one country send foreign investors fleeing from other developing nations.
The new program for Argentina was approved after the Bush administration won concessions including a requirement that US$3 billion of the support to be extended next year will be tied to efforts by the Argentine government to restructure its debt load.
Treasury Secretary Paul O'Neill and other Bush officials have been strongly critical of the massive bailout packages assembled by the IMF during the Clinton administration to deal with financial troubles during the Asian crisis. The IMF statement Friday said that further loans in 2002 and 2003 would be provided on a timetable which will be determined in coming months.
The IMF said that US$6.9 billion in fresh loans would be offered next year and an additional US$973 million would be provided in 2003. The IMF said that up to US$3 billion of next year's loan money would be tied to efforts to restructure Argentina's debt. Those talks between the Argentine government and private investors are continuing.
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