IMF Aid Plan for Argentina

This is Steve Ember with the VOA Special English program IN THE NEWS.

The International Monetary Fund has agreed to help Argentina refinance some of its debt. Argentine President Nestor Kirchner announced the deal Wednesday in Buenos Aires. The agreement is designed to help the country recover from its worst economic crisis.

The three-year agreement will refinance twenty-one thousand-million dollars of debt owed to international lenders. This includes more than twelve-thousand-million dollars owed to the IMF. Most of the rest is owed to the World Bank and the Inter-American Development Bank.

The agreement needs official approval by the IMF board which meets in Dubai on September nineteenth.

The agreement came a day after Argentina failed to make a three-thousand-million dollar payment to the IMF. That was the largest single payment ever missed in the history of the IMF. Argentina says it repaid the money on Thursday.

Argentina had been working for weeks on a deal to refinance the loan payments to the IMF. Argentina wanted more time to pay.

Officials had criticized the IMF's demands in return for the aid program. The IMF had demanded that Argentina pay private banks for money lost during the economic crisis at the end of two-thousand-one. The crisis led the government to devalue the peso. The IMF had also demanded that Argentina permit private utility companies to increase their rates. The agreement does not include either of these demands.

IMF Managing Director Horst Koehler said the agreement is designed to help Argentina meet goals for growth, employment and social equity. He said it also would help the country's banking system and increase lending needed to support recovery.

In December of two-thousand-one, the IMF refused to extend loans to Argentina. It said the government had failed to control spending. Argentina declared itself unable to pay its huge public debt.

The new agreement means Argentina can now begin to negotiate ways to restructure its ninety-thousand-million dollars of private debt. Hundreds of international creditors are owed money. After that, Argentina could again borrow on financial markets, which in turn would help the economy.

The country's economic troubles were largely caused by too much spending by the government. The crisis in December of two-thousand-one deepened a recession.

Argentines are still dealing with the crisis. Half of the country's thirty-six million people are poor. And there are few jobs. Many Argentines blame dishonest government officials for the problems.

Argentina's economy has shown some signs of recovery under President Nestor Kirchner. He took office earlier this year. He says further cuts demanded by the International Monetary Fund as part of economic reform would push the country back into recession.

In the News, from VOA Special English, was written by Cynthia Kirk. This is Steve Ember.

Voice of America Special English

Source: IN THE NEWS - Septemer 13, 2003: IMF Aid Plan for Argentina
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