ECONOMY-ARGENTINA: Officials Question IMF’s Reticence to Help

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Jun 5 2002 (IPS) - “Sectors” of the International Monetary Fund (IMF) are resisting moves to help Argentina recover from its crisis, because they continue to issue new requirements even when the Argentine government has already met key conditions, stated Aníbal Fernández, president Eduardo Duhalde’s chief of staff.

Argentina “already complied” with the IMF requirements, and is ready to negotiate for a disbursement of financial aid, according to Fernández.

However, he says, “There are sectors related to the institution that apparently do not have the will to resolve the problems.”

Argentina is suffering a profound economic and social crisis that exploded in December in the context of a profound four-year recession. Unemployment now surpasses 23 percent and over half the country’s population of 37 million lives in poverty, with several million falling below the poverty line only in recent months.

The government is staking its bets on obtaining IMF support in order to avoid default on debt to multilateral credit organisations.

In recent weeks the Argentine Congress approved a new bankruptcy law and annulled legislation on certain financial crimes, and the federal government signed an agreement with the largest provinces to dramatically reduce the fiscal deficit.

All were measures the IMF demanded in exchange for the payout of 9.0 billion dollars in financial aid, part of an already approved loan package. Argentina would use those funds this year to make debt payments to the multilateral credit organisations.

Economy Minister Roberto Lavagna acknowledged that, in the best- case scenario, the Argentine government would only obtain “an accounting entry, and not fresh money”.

Credits aimed at confronting the country’s dire social situation or financing exports could be granted by the World Bank or by foreign governments, but only after an accord is reached with the IMF.

Fernández refused Monday to name the IMF officials who are reticent to help the country, but in stating that groups within that institution have misrepresented information on Argentina, he appeared to refer to IMF director of Special Operations, Anoop Singh.

The Economy Ministry ordered the Argentine representative before the IMF, Guillermo Zocali, to file a protest based on Singh’s alleged misrepresentation of a communiqué from the Association of Argentine Banks that expresses support for the government’s financial measures.

One point of contention, Lavagna admitted, is that the IMF is questioning the way the “economic subversion” law on financial crimes was repealed, because some of the articles of the annulled legislation were transferred to the Penal Code.

The IMF wants President Duhalde to veto those articles, leaving in place only the bill repealing the law. But Lavagna said that “for now” the president is planning to “leave things as they are.”

IMF managing director Horst Koehler said that Argentina has made “enough progress” to merit an “advance mission to prepare for the negotiations,” an indirect way of saying that the IMF will not yet send a delegation with the authority to finalise an agreement.

Koehler assured that “we will do everything possible” so that an accord is reached within 45 days, but stressed that this does not mean a deadline has been set, because, for the IMF, “what is important is substance and evaluation.”

“There is progress and we are realistic, but there needs to be a credible framework,” he added.

Koehler’s statements shot down any hopes for the Jun 30 timeframe Lavagna had predicted for an agreement. The minister travelled to Washington in May and stated then that the end of June was the deadline agreed for an accord – if the requisites were met.

Javier González Fraga, former president of Argentina’s Central Bank, commented that it is “a classic IMF move” to add new conditions. He had recommended that Duhalde seek support within the European Union, whose governments insisted that Argentina comply with the IMF demands.