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| quote: | Argentina clears IMF debt, ushers in "new phase"
Tue Jan 3, 2006 7:32 PM ET
By Damian Wroclavsky
BUENOS AIRES, Argentina (Reuters) - Argentina canceled its entire $9.5 billion debt to the International Monetary Fund on Tuesday, effectively cutting free from the Washington-based lender after years of bitter clashes.
"This is the start of a new phase," a smiling Economy Minister Felisa Miceli told reporters after the transaction was completed.
Argentine President Nestor Kirchner announced on December 15 the government would use nearly a third of its foreign reserves to wipe out the remaining IMF debt, two days after Brazil announced it would pay its $15.5 billion debt with the IMF ahead of time.
Argentine leaders say the early payback gives the government more freedom to carry out economic policies that have not always met with the fund's approval.
"This allows Argentina to improve its economic, financial and fiscal situation and has a strong political and symbolic value ... Argentina is recovering autonomy in its economic decisions," said Miceli.
An IMF spokesman declined to comment on the payment, a logistical feat that Central Bank Governor Martin Redrado described as the "the central bank's most important and complex transaction in its 70-year history."
The payment involved funds transfers to 16 different central banks worldwide, he said.
Argentina's reserves totaled $18.5 billion after the payment, down from $28.05 billion on Tuesday, Redrado said.
The Argentine Treasury will give the central bank 10-year bonds to compensate for the drop in reserves.
Miceli did not rule out the possibility of using the reserves again in the future to repay Argentina's remaining $16 billion debt to other multilateral lenders including the World Bank and the Inter-American Development Bank.
At the time of Kirchner's surprise announcement in December, Argentina owed $9.8 billion to the IMF and has made some payments in the interim to leave the final figure at $9.5 billion.
Kirchner, a left-leaning Peronist who took office in May 2003, has slammed the IMF for funding what he calls the failed free-market policies of his predecessors.
SOUR RELATIONS
Argentina's relations with the IMF soured badly after its 2001-02 economic crisis that plunged millions into poverty. The IMF sent a rescue package to then President Fernando de la Rua as the nation's economy teetered on the brink of collapse.
Argentina will save $800 million in interest payments, Kirchner has said. But analysts note the country pays double the interest by tapping for funds from international capital markets.
Argentina, Latin America's third-largest economy, has been a key player in international debt markets for decades, first due to its heavy borrowing in the 1990s and then for declaring the biggest sovereign default in modern history in 2002, at the height of a devastating financial crisis.
The government restructured its $100 billion in defaulted debt earlier this year in a controversial bond swap in which participating creditors took a loss of about 60 percent on their investment.
While many Argentines applaud Kirchner's independent streak, financial markets are more skeptical, fearing that in the absence of IMF influence over economic policy, Kirchner will turn to increasingly populist means of sustaining a three-year economic upturn.
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Argentina clears IMF debt, ushers in "new phase"
| quote: | IMF confirms Argentina clears its entire debt
Wed Jan 4, 2006 10:45 AM ET
WASHINGTON, Jan 4 (Reuters) - The International Monetary Fund on Wednesday confirmed that Argentina had paid off its entire debt to the fund.
"I can confirm that Argentina has today completed early repayment of its entire outstanding obligations to the IMF amounting to SDR 6.656 billion ($9.6 billion)," an IMF spokesman said in a brief statement.
Argentina President Nestor Kirchner announced on Dec. 15 the government would tap its foreign reserves to pay off the IMF debt, two days after Brazil said it would do the same.
The moves wipe out the debts of two of the IMF's biggest borrowers.
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IMF confirms Argentina clears its entire debt |
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