Published Wednesday, August 22, 2001

IMF offers Argentina $8B more in loans

Decision boosts IMF total to $22B From Herald Wire Services

WASHINGTON -- The International Monetary Fund said Tuesday it will offer Argentina an additional $8 billion in loans in an effort to help the country through a severe economic crisis.

The decision will boost the economic resources the IMF will make available to Argentina to $22 billion, up from the current level of $14 billion in support, according to IMF Managing Director Horst Koehler.

Koehler made the announcement on the 12th day of talks Argentine officials were holding in Washington with the IMF.

The announcement marked the latest effort by the IMF to stabilize a severe economic crisis in Argentina, which is struggling to pull out of three years of a steep recession.

Argentina's problems have sent shock waves through financial markets in Brazil and other countries in the region, raising fears of a repeat of the 1997-98 Asian currency crisis.

In a statement, Koehler said that $5 billion would be added to Argentina's emergency credit line immediately upon approval of his recommendation by the IMF's 24-member executive board. Koehler said the other $3 billion would be added later.

Koehler made his announcement after several hours of closed-door talks with the IMF's 24-member executive board. Because of the way the IMF operates, Koehler would not have made the announcement of increased support if he had not won the go-ahead from the executive board.

Koehler's statement also said that Argentine authorities were ``considering the possibility of a voluntary and market-based operation to increase the viability of Argentina's debt profile.''

Koehler did not elaborate in his brief statement. However, U.S. officials have said that Argentina needed to restructure its $130 billion foreign debt burden to make sure that the country does not have to continually come to the IMF to seek help in repaying the loans.

And some investors remain unconvinced Argentina will be able to restart growth and damp default concerns, even with fresh aid.

``It can get them through the elections in October without defaulting,'' said Charles Cassel, who helps manage $450 million in emerging market debt for Standard Asset Management in Miami.

New money probably won't be ``sufficient to address the long term structural issues the economy faces, i.e. exchange rate competitiveness and labor market flexibility,'' Cassel said.

Argentine President Fernando de la Rúa has expressed confidence that his country can meet its debt crisis and pull out of a severe recession that has sent the unemployment rate soaring above 16 percent.

However, a new austerity program he imposed to lower the government's deficit has sparked widespread street protests. Government workers were unhappy with the austerity program's 13 percent cut in their wages.

The $8 billion in new IMF loans was at the high end of the reported $6 billion to $9 billion that the Argentine negotiators had been seeking.

http://www.miami.com/herald/content/business/digdocs/041398.htm

-- Martin Thompson (mthom1927@aol.com), August 22, 2001

Answers

I am still skeptical about this money being, even, enough to cover the country's soaring debt interest.

-- Wellesley (wellesley@freeport.net), August 22, 2001.

To me, this is just another case of good money chasing bad. This is something the I.M.F. is good at.

-- Billiver (billiver@aol.com), August 22, 2001.

The IMF needs to forgive the loans, not add a new one. Let me guess, The IMF uses "money owed" as collateral to fund new loans. Nice gig! So they basically have zero assets(never had any to start with but exhorbitantly paid executors) and will simply evaporate when the %$%^ finally hits the fan.

Who are these "people" anyway? They've got the whole surface of the earth by the balls. Find out who "they" are. Read either Jim Marrs (Rule by Secrecy) or David Icke (And The Truth Shall Set You Free). And prepare for a mind blowing experience.

-- Ken (n4wind@sonic.net), August 22, 2001.