Argentina's default on the private portion of its public debt in January opened a long story of comings and goings between the South American country and the International Credit Institution based in Washington. Therefore, during the last ten months, Argentine economic ministers rushed to Washington no less than ten times to reach an agreement without positive results.
Firstly, both parties announced the deal was supposed to be ready by April. Then, the date was pulled off to "June or July". This month everybody in Argentina and in the USA discounted the agreement was to be signed in no time. Until now, the reality confirmed nothing it's over until it's over.
In April, Argentina complied with IMF conditions in full. The Congress passed a new Bankruptcy Law and repealed the economic Subversion Law to conform to international standards. The IMF replied by stating more conditions. The days passed and in the meantime something had to be done to avoid the financial collapse. Consequently, the new Minister of Economy, Roberto Lavagna adopted an independent position in several key issues.
Additionally, local authorities assumed a new line in negotiations, which was summarised by Lavagna to PRAVDA.Ru during a press conference this week in these terms: "We are not going to agree to conditions we know cannot be complied with. This is something Argentina has done before and of 19 deals, it has not fulfilled 15. The IMF stated unreachable goals, and Argentina easily said yes."
To reaffirm Argentina's intention to integrate with the rest of the world, the country has been actively negotiating with Multilateral Lending Agencies and has paid 4.3 billion. Of course, Argentina did not receive a single dollar from them. This contradicts IMF raison d'etre, which consists of being of anti-cyclical help to countries in troubles. Taking money out from recessive economies only deepens the negative cycle and eliminates any possibility of growing. Argentina grounds on the aforesaid its decision of stop paying to Multilateral Lending Agencies. Response of the IMF: pay and then negotiate, even with your weakened reserves.
The problem is essentially political. The US State Department urges a rapid agreement, as well as Europe. However, nothing is for free: Argentina promised the European Union an increase in public services fare, all of them controlled by European companies such as Telecom, British Gas, Telefonica de Espana, Camuzzi Gas, etc. -
Lavagna will fly tomorrow to Europe to obtain EU political support and press the IMF for a rollover in foreign debt. What will be next, nobody knows. The agreement is so close and yet so far...
Hernan Etchaleco PRAVDA.Ru Argentina
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