IMF to send aid blueprint to Argentina

Argentina said today that the IMF would send a draft aid blueprint next week after the lender deemed Buenos Aires' plan inadequate…

Argentina said today that the IMF would send a draft aid blueprint next week after the lender deemed Buenos Aires' plan inadequate, and analysts warned the loan would come with a slew of new conditions.

The latest development after months of tough talks comes as Argentina stepped up a war of words with the US government, which has the biggest vote on the IMF board, in response to criticism of its reform proposals.

"The (IMF) mission that was here yesterday met with Economy Ministry and Central Bank (officials) and the IMF agreed to send a draft letter of intent next week which Argentina will study," Cabinet Chief Alfredo Atanasof said.

Argentina needs an IMF deal to unlock enough aid to cover upcoming debt payments to multilateral lenders, buying it time to stabilise the economy amid a punishing economic collapse that has driven half the population into poverty and triggered riots in December that toppled the last elected government.

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In August, Argentina sent a draft letter of intent to the IMF outlining an economic plan, including pledges to overhaul of the financial system and achieve a budget surplus through spending cuts and more tax collection.

But US Treasury Secretary Paul O'Neill said yesterday that the proposals did not "reach the full measure of creating a basis (for sustainability)" and the IMF has said work is still needed on most major issues.

"These long months of talks (with the IMF) have no importance. The truth is we are not dependent on O'Neill," Atanasof told reporters.

Nonetheless, sources at the Washington-based lender said they expected a $2.78 billion payment owed to the IMF that comes due on Monday to be rolled over.

President Eduardo Duhalde lashed out at O'Neill, telling reporters not to pay attention to the US official and his opinions on Argentina, which wants aid from IMF contributor member nations like the United States, after defaulting on its public debt and devaluing earlier this year.

But analysts were encouraged by the IMF's willingness to carry on negotiating an agreement.

"It's a good sign. The IMF continues to intend to help Argentina but it will probably send a letter with a lot more conditions to put a stop to all these political shenanigans," said Aldo Abram, economist at local consultancy Exante.

The latest IMF mission in Argentina this week is trying to clear up confusion caused by political wrangling and court rulings the government says is hurting chances of winning aid.

Relations between the IMF and Argentina have been strained by recent measures to index loans to inflation and a Supreme Court ruling striking down spending cuts.