Argentina agrees to repay $3.1b IMF debt
BUENOS AIRES -- Argentina and the International Monetary Fund reached an agreement yesterday for the repayment of $3.1 billion owed to the global lender, a government official told the Associated Press.
President Nestor Kirchner's government issued the order to make the payment due yesterday, said the source, who spoke on condition of anonymity.
Details of the accord were not made public. Neither the IMF nor Kirchner's administration would comment, although the government said it would release a statement today. .
The deal came after days of testy negotiations between Kirchner's government and the Washington-based lending agency. But the end of the latest confrontation dispelled any investor worries of a possible default and sent Argentine stocks surging.
Argentina's benchmark Merval index jumped 6 percent to close at 1,217.65 yesterday, erasing a drop of 4.5 percent over the three previous sessions. The broader General index also rallied, climbing 4.5 percent to 53,099.
For days, Kirchner had said he would make Argentina's latest debt payment only if the IMF first sent signals it would approve an upcoming report on the nation's economic progress as part of a financial accord the two struck last year.
Argentina is facing its second economic progress report as part of a review of a three-year $13.3 billion loan package arranged with the IMF in the wake of its 2001-2002 economic collapse.
The review, if approved by the IMF's board of directors, would allow Argentina to get back most of the $3.1 billion it was required to pay the IMF by the close of banking yesterdat.
The IMF has been pressing Argentina to move more quickly in restructuring about $100 billion in defaulted debt -- a legacy of the country's economic debacle.
Kirchner's government says it wants its creditors to accept a 75 percent reduction in the face value of the foreign debt, a proposal IMF officials and many creditors have rejected.
The official said a breakthrough came during a telephone call between the Argentine government and the IMF in Washington. The independent Argentine network Todo Noticias said it was a "friendly" half-hour call between Kirchner and the IMF's acting managing director, Anne Krueger.
Riordan Roett, an Argentina expert at Johns Hopkins University, said both sides had compelling reasons to avoid a long impasse.
"The key issue is that the IMF is in a trap. They have to continue with the review process and release the funds needed to repay the IMF," Roett said.
Argentina defaulted on a $2.9 billion loan owed to the IMF last year, but eventually paid it after reaching a new long-term deal with the global lender.
