Argentina close to agree with the IMF

Roberto Lavagna flights to Washington

After more than ten months of tough negotiations, Argentine Minister of Economy Roberto Lavagna, flights to Washington to discuss the final adjustments of the deal with the International credit institution. Argentina will not blindly accept IMF conditions as the local and the international scenario has changed since the first quarter of this year, when the South American country desperately looked for financial aid at any expense.

Locally, Argentina stabilized the macroeconomics and is slightly reverting a five years recession process, which started choking the country in 1998. The Government succeed in stopping the slump in the value of the local currency by imposing severe restrictions to foreign currency exchange. However, aims to maintain a high valued Dollar to encourage exports and promote the depressed industry. Furthermore, fixed inflation rates at acceptable levels, since the second half of the year.

On the other hand, Argentina is now in better position to discuss with the IMF, thanks to the dramatic changes of the geopolitical situation in Latin America. The victory of the Brazilian left wing candidate, Luiz Inacio Lula Da Silva, pushed Washington to put pressure on the IMF for a quick deal with Argentina. The White House considers now that a ruined Argentina could get more close to Brazil and fall inside its zone of influence. They are convinced that an hypothetical axis Caracas - Brasilia - Buenos Aires,  could represent a strong opposition for US interests in the region.

With the above in mind, the Argentine Minister of Economy has imposed some of National Administration's points of view to Washington; something unthinkable in March last year when negotiations started.

Lavagna focused in three main points. First of all, refused IMF requirements to agree a higher primary superavit for 2003. He also insists on keeping Central Bank controls to foreign currency exchange, which will stabilize the value of the Peso. Finally, managed to avoid an astronomic increasing in public service fairs, firmly standing against multinational corporations and IMF pressures.

Lavagna has properly handled negotiation timing with the International Monetary Fund and proved that sometimes, tactics of the weak can defeat the strategy of the strong. Otherwise, How is possible to imagine a defaulted country conditioning foreign financial aid?

Hernan Etchaleco

Photo: Argentine Minister of Economy, Roberto Lavagna.

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Author`s name Margarita Kicherova