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IMF Set to Help 2 South American Nations

Economy: The agency is ready to propose an early loan for Argentina and a credit line for Brazil.

August 04, 2001|From Associated Press

WASHINGTON — The International Monetary Fund said Friday that it was prepared to accelerate a $1.2-billion loan to Argentina and establish a $15-billion line of emergency credit for Brazil in an effort to keep economic troubles in the two South American nations from spreading.

IMF Managing Director Horst Koehler said he will recommend the actions.

His announcement came following discussions President Bush held with British Prime Minister Tony Blair and Spanish Prime Minister Jose Maria Aznar about deepening economic troubles confronting South America's two largest economies.

Before the IMF announcement, White House spokesman Ari Fleischer said Bush had discussed the Latin American economic situation in phone calls with Blair and Aznar.

Fleischer said all three leaders had endorsed the government austerity program being implemented by Argentine President Fernando de la Rua in an effort to stabilize the country's worsening economic situation.

The Bush administration had dispatched Treasury Undersecretary John Taylor to Buenos Aires for talks Friday with officials in that country.

Koehler, in his statement, said he will recommend that the agency's executive board provide the loan money to Argentina this month. The installment had not been scheduled to be disbursed until September.

For Brazil, Koehler said he will recommend that the IMF's executive board approve creation of a standby loan arrangement. He said Brazil could begin receiving loans in September with the first installment expected to total $4.6 billion.

"The Brazilian authorities are strengthening fiscal and monetary policies and implementing their structural reform agenda in the face of a difficult external environment," Koehler said.

Although an announcement of the accelerated loan for Argentina had been expected, Koehler's announcement of the creation of the credit line for Brazil was a surprise.

Koehler, who took over as head of the 183-nation lending agency last year, had vowed to overhaul the IMF's crisis response efforts.

Koehler's proposals for support for both Argentina and Brazil were expected to have little trouble winning approval from the agency's 24-member executive board.

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