- The Washington Times - Saturday, January 25, 2003

The International Monetary Fund approved a $6.78 billion loan package for Argentina yesterday, ending nearly a year of negotiations and giving South America's second-largest economy some breathing room until it can elect a new president.
The IMF said the loan package was designed to provide "transitional financial support" through Aug. 31.
After that, the agency hopes to have in place a longer-term plan that would provide fresh resources to help Argentina emerge from the worst financial crisis in its history.
The IMF's approval came even though the agency could not come to terms with Argentina on an IMF-approved plan to deal with the country's economic problems. Normally, the organization refuses to provide new loans until such an agreement is in place.
The government of Argentine President Eduardo Duhalde balked at some IMF demands, calling them too stringent, and threatened to default on IMF loans coming due this month if no agreement was reached on new loans, an action that would have cut the country off from its last source of foreign credit.
The IMF action yesterday essentially will provide the country with enough resources to stay current on its IMF obligations through August.
Argentina is scheduled to elect a successor to Mr. Duhalde in late April. The new president is to take office in May.
The IMF hopes the new administration will have the political support needed to enact tough economic reforms that will allow the IMF to provide new loans to help end the country's lengthy economic downturn.
In Buenos Aires, Argentina's Economy Ministry said the new loan package would provide "an important element in the process of normalization, stabilization and economic recovery" of the nation.
Mr. Duhalde offered his congratulations to the country's economic team from Davos, Switzerland, where he was attending the World Economic Forum. He is scheduled to meet today with IMF Deputy Managing Director Anne Krueger, who at times has been a vocal critic of Argentina's efforts to reach a new loan agreement.
The IMF support includes a new $2.98 billion loan and a one-year extension of $3.8 billion in loan payments that were coming due over the next eight months.
The Bush administration originally took a hard line in the IMF negotiations with Argentina, insisting the agency should not loan any more money until Argentina agreed to implement tough economic reforms.
However, U.S. officials moderated that position as the threat of a default loomed and it became clearer that Mr. Duhalde's lame-duck government did not have the political power to gain approval of the changes the IMF was demanding.
Argentina has been mired in its worst financial crisis for more than a year since it was forced to default on the bulk of $141 billion in foreign obligations, devalue its currency and freeze bank deposits.
In anticipation of the IMF board approval, Argentina on Thursday repaid past-due loans to the World Bank and the Inter-American Development, prompting those agencies to announce they would resume lending operations, directing support to programs intended to help mitigate the steep recession's effect on the country's poor.

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