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Argentina to Pay $3.1 Billion to the IMF

The heavily indebted country agrees to the move after the lender promises to release more financing from a $13.3-billion pact.

March 10, 2004|From Bloomberg News

Argentina agreed Tuesday to make a $3.1-billion payment to the International Monetary Fund after the lender pledged to release more financing to the country.

President Nestor Kirchner had threatened to miss the payment unless the IMF agreed to back Argentina's stance on restructuring $99 billion in defaulted bonds. The IMF withdrew demands not included in a lending agreement signed in September.

Argentina's Merval stock index had its biggest gain in 11 months, and the country's currency and benchmark bond rose on expectations that the government would receive its next loan disbursement from the IMF and restructure the debt in question two years after a massive default.

Missing the payment, which amounts to 20% of the country's central bank reserves, would have isolated Argentina from international financing and made it more difficult for the government to obtain support from the Group of 7 countries in its debt negotiations, reducing the chances of an agreement with bondholders.

The IMF had cut off financing from countries including Sudan and Liberia after defaults to the fund.

Argentina used a similar tactic in September, when it sent $2.9 billion owed to the fund a day late.

Polls in Argentina show that the president has a 70% approval rating, in part because of the pressure he has put on the IMF, which he blames for the nation's debt default.

IMF officials declined to comment.

The IMF is now poised to make its next loan disbursement to the country from a $13.3-billion agreement.

Argentina is set to receive $3.1 billion from the IMF this month, money it would use to replenish reserves used to make today's payment.

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