Argentina: Negotiations with the IMF in stand by

Fears of a new Argentine's debt default have become a plausible reality.

In despite of the public will of both parties, the International Monetary Fund and Buenos Aires do not show signs of reaching an agreement in the short term. Consequently, fears of a new Argentine's debt default, this time with the international credit institutions, have become a plausible reality.

Last week, IMF major authorities put pressure on the South American Government to meet foreign obligations with country's weakened reserves. The first reaction of the Argentine Economy Minister Roberto Lavagna was to reject such option. However, this week has expressed Government's will to settle September bills against reserves before his new trip to Washington.

On Tuesday, Lavagna said in a press conference with foreign correspondents in Buenos Aires that the Government was not in position of using funds from the national treasury to afford future obligations if there is no agreement with IMF before. It is clearly a strategy of the National Government to make the IMF responsible for a possible default of Argentina with another credit institutions.

However, Minister Lavagna expressed that a deal with the IMF would be the "only way" Argentina will be able to make due payments. The problem is that Argentina faces heavy obligations in October and without an agreement will be forced to use its option to defer for 30 days debt owed to the International Monetary Fund.

In turn, the IMF demanded Argentina a minimum warranty of compliance with a future deal and a whole country unity to follow its advice. Besides claimed for an urgent undo a freeze on bank deposits that is choking the economy.

Argentina paid in 2002 around $ 3.400 millions in respect of foreign obligations and decided to settle with country's reserves those which expired in September. This situation led to a strong weakening on treasury funds and a critical internal situation after the financial crack in December last year.

Hernan Etchaleco PRAVDA.Ru Argentina

Photo (Reuters): Argentine Minister of Economy Roberto Lavagna negotiates an aid deal with the IMF