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22 December 2001
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No funds for you, Argentina
22dec01
THE International Monetary Fund is prepared to let Argentina go without funds until early next month as unrest continues in the country.
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Yesterday an IMF official said Argentina was not likely to get more funding until it had a new economic team in place.
The fund, which has withheld disbursements from a $US22 billion ($43.5 billion) credit line it opened last year with the Latin American country, is willing to meet with Cabinet members once they are installed, IMF spokesman Thomas Dawson said in the US.
"We need to have new interlocutors to deal with," Mr Dawson said.
The IMF's executive board must approve lending decisions, and no meeting is scheduled until January 4, the fund said.
The IMF's willingness to hold off on aiding a country that has borrowed more than a dozen times from the fund since 1958 reflects the lender's calculation that Argentina's troubles aren't spreading to other emerging-market economies.
"The contagion effect is certainly not what it was" Anne Krueger, the fund's No 2 official, said in a television interview with CNBC India.
Argentina is defaulting on most of its $306.5 billion debt and is under pressure to devalue its currency to cope with an economic recession entering its fourth year.
The IMF said on Tuesday that Latin America's third-largest economy will contract next year by 1.1 per cent, scrapping a prediction it made only three months earlier that output would expand 2.6 per cent in 2002.
The new figure would make it Latin America's worst performer.
The IMF earlier this month withheld a $2.5 billion loan payment to Argentina after the government failed to rein in the budget deficit and sought to avert a financial collapse by limiting bank withdrawals.
Argentines responded to the budget cuts with mass looting in the three biggest cities.
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