UPDATE 3-IMF, Argentina agree to talk more on debt swap
Mon Mar 7, 2005 07:20 PM ET
(Adds U.S. Treasury statement)
By Lesley Wroughton
WASHINGTON, March 7 (Reuters) - The International Monetary Fund and Argentine economy officials agreed on Monday to hold talks in the coming weeks, following initial meetings in Washington on the country's debt swap and future of its suspended IMF loan program.
Argentina offered about $41 billion in new debt in exchange for over $102 billion in defaulted bonds and past due interest, amounting to about 30 cents on the dollar for investors.
Without commenting on the debt swap, the IMF said discussions with Argentine Economy Minister Roberto Lavagna and other senior officials were "fruitful and cordial".
"It was agreed that the next stage in the dialogue will be to hold technical-level meetings in Washington in the coming weeks," the IMF said in a brief statement.
A few blocks from the IMF headquarters, Lavagna later met U.S. Treasury Secretary John Snow, Under Secretary for International Affairs, John Taylor, and his deputy Randall Quarles.
"Secretary Snow received an update from Minister Lavagna on the recently concluded debt exchange," Treasury spokesman Tony Fratto said later in a statement.
He said the sides also discussed the state of the Argentine economy, including prospects for economic growth and inflation expectations, and plans for economic reforms.
Lavagna declined to comment as he left U.S. Treasury.
The Argentine government said last week creditors agreed to swap 76 percent of defaulted bonds for new ones, a result IMF insiders said "may be acceptable for the IMF to consider a new program for Argentina."
But the IMF insiders, who agreed to speak on condition of anonymity, said mainly European shareholders in the IMF had raised concerns about the outstanding 24 percent of creditors who did not sign on to the offer, which closed on Feb. 25. Argentina has said there will be no further offers.
Fernando Losada, a senior emerging market economist at New York-based ABN AMRO, said he expected the IMF to urge Argentina to reach an agreement with the remaining group of creditors.
Still, the IMF has refused to officially comment on the debt swap, including what it sees as an appropriate acceptance level that would enable Argentina to move on three years after its unprecedented debt default.
Meanwhile, shareholder governments on the IMF board said they were eager to see Argentina quickly resume a $13 billion IMF loan agreement, put on hold in August to allow the government to focus on restructuring the defaulted debt.
The IMF was in the midst of a quarterly performance review of the loan program in July when the Argentine government suspended talks to concentrate on the debt restructuring.
Losada said he expected the IMF to make adjustments to the Argentine program to make up for the lack of progress on structural reforms and to ensure long-term Argentine growth.
"These first meetings with the IMF are going to be very preliminary, so Wall Street is not expecting anything out of these talks, which may take at least a few more weeks, if not a couple of months," Losada said.
"What should come out of this is a clearer idea of what the IMF is going to request from Argentina in terms of reforms," he added.
Losada said he expected the IMF to focus on utility reforms and approval of a new tax revenue sharing law.
