Argentina Battles To Earn Further IMF Support

by Mike Godfrey, Tax-News.com, Washington

01 October 2001

Although the IMF has promised additional assistance to Argentina, it is dependent on debt restructuring and the key element - guarantees based on forward tax revenues - can't be delivered by the current Argentine government because of domestic discord.

After meetings in Washington with government representatives, IMF directors Horst Kohler and Anne Krueger and the vice-president of the World Bank, David de Ferranti, expressed concerns in particular about the mid-term elections due on October 14th. If these alter the balance of power in the Senate against the government then the delivery of tax guarantees will become problematic.

' We are waiting,' said Anne Krueger after the talks. 'There has been nothing new in the area of financing but we shall go on talking,' she said.

In exchange for further support, the IMF is demanding the attainment of a zero-deficit target, as well as guarantees based on tax revenues. Both objectives, particularly the latter one, seem to require the passage of legislation and would be attainable only if President De la Rua manages to assure governance after the mid-term elections.

Meanwhile, back at home, Finance Minister Domingo Cavallo keeps trying to reach favourable agreements on debt with domestic lenders. Developments have not been particularly favourable, with differences surfacing last week in particular over the role of Argentina's wealthy pension and retirement funds in a support package.

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