IMF Chief Meets with Troubled Argentina Reuters Monday, June 23, 2003; 11:05 PM By Hugh Bronstein
BUENOS AIRES (Reuters) - The head of the International Monetary Fund began talks with Argentina's President Nestor Kirchner Monday, as the country's new government made a fresh start at pulling the economy out of its debt crisis. IMF Managing Director Horst Koehler also met Economy Minister Roberto Lavagna, as well as bankers and businessmen. The two-day meetings come 18 months after Argentina staged the world's biggest debt default and were seen by Wall Street as a preliminary step in the country's financial rehabilitation. "We would hope that the IMF encourages Argentina to move quickly on the debt restructuring and presses upon the Argentine authorities the need to make more of a fiscal effort," said Abigail McKenna, a portfolio manager at Morgan Stanley Investment Management and member of the steering panel of the Argentina Bondholders Committee. As the meetings took place, several hundred protesters from left-wing groups gathered in downtown Buenos Aires to protest Koehler's presence. Some demonstrators burned a U.S. flag. Officials in the government, the IMF and the United States -- the top IMF shareholder -- have said the country would benefit from a long-term lending deal to replace an intermediate accord set to expire in August. But the Kirchner government is keen to protect its citizens from IMF-style austerity after a four-year recession pushed millions of middle class workers into poverty and joblessness. Lavagna, under a previous government last year, engaged in a war of words with the IMF over his softly-go-softly approach to austerity programs. In a possible sign of progress, the government said on Monday it would give state help to thousands of poor Argentines unable to make mortgage payments. That may allow the government to end an emergency measure that prevents banks from foreclosing on mortgages -- a measure that irked the IMF. With bond restructuring talks yet to start and the economy just beginning to grow, expectations were muted as Koehler made the rounds in Buenos Aires. Market players did not expect a new IMF program for Argentina to be announced this week. Koehler was expected to speak publicly about his trip late Tuesday afternoon after meeting with legislators, provincial governors and Central Bank chief Alfonso Prat Gay. Considered a star pupil of free-market policies in the 1990s, Argentina fell from grace with the IMF and United States after mismanagement led to economic collapse at the end of 2001 when the country defaulted on $95 billion in debt. The IMF drew heavy fire for its role in the crisis -- with many Argentines saying their country made a major mistake by following the lender's advice -- and for its failure to bail out the country. But six months ago, the two sides managed to strike a $6.8-billion debt rollover deal, which expires in August. Latin America's No. 3 economy is one of the largest debtors to multilateral lenders. Argentina owes $14 billion to the IMF and $31 billion to multilaterals as a whole.
