IMF approves Argentina loans

www.bayarea.com Posted on Sat, Jan. 25, 2003 $6.78 BILLION PACKAGE WILL BRING IT BACK FROM THE BRINK OF ECONOMIC RUIN By Kevin G. Hall Knight Ridder

RIO DE JANEIRO, Brazil - Argentina's government Friday welcomed the International Monetary Fund's approval of a controversial $6.78 billion loan package that will allow the South American nation to step back from the brink of economic ruin and rejoin the international financial community.

The IMF's executive board approved the transitional package Friday after a two-hour meeting. The deal lets Argentina defer payments on $3.8 billion in loans due from January to August, and provides $2.98 billion to repay its debts to global lending institutions.

On Thursday, the World Bank and the Inter-American Development Bank restored credit to Argentina.

Luis Verdi, a spokesman for caretaker President Eduardo Duhalde, said the president was very satisfied'' with the IMF deal. Duhalde had complained that the IMF is hostile'' to Argentina because it held up providing any help throughout last year.

It took Argentina more than 11 months just to get this transitional agreement, and the IMF refuses new lending to Latin America's second-biggest economy until after a new president takes office May 25.

Since announcing in December 2001 that it would default on $151 billion in government debt, Argentina has been unable to win private credit or loans from the IMF, the World Bank and other institutions. Still ahead are negotiations with private creditors to which Argentina owes more than $50 billion. Duhalde said this week that Argentina must reduce its debt to private creditors by 70 percent, but didn't say how.

Many high-ranking IMF officials opposed even a transitional loan package for Argentina, because it hasn't resolved key issues such as the legality of the government's seizure of citizens' bank accounts last January. The action froze dollar-denominated accounts, then converted them into Argentine pesos at a rate unfavorable for depositors.