IMF completes review of Argentina, clearing way for loan payment

By Reshmi Basu

New York, March 22 - The International Monetary Fund said it completed the second review of Argentina's performance under a standby credit arrangement, the final step before release of a $3.1 billion loan payment.

As part of the review, Argentina said it would work on a collaborative agreement with their private creditors on massive restructuring of its sovereign debt.

Under the agreed framework, investment banks will be appointed throughout the restructuring process to assist in preparations and help market the debt exchange offer.

Secondly, the government must engage in meaningful negotiations will all representative creditor groups.

And finally, Argentina will need to design an offer that will result in a sustainable debt for Argentina and which will also please creditors.

As part of the agreement, Argentina has already executed terms of this strategy, including the appointment of three international and three domestic investment banks.

Twenty-five representative creditor groups have been invited to Buenos Aires to hold separate talks during March 24 through April 16.

"Consistent implementation of this debt restructuring framework will be essential for the continued support of the international community," said Anne Krueger, the IMF's acting managing director, in the news release.

"In particular, the authorities' intention to discuss with creditors all aspects of the debt exchange offer, including how best to take into account proposals received from creditors, is crucial.

"The authorities are encouraged to work diligently to design a debt exchange offer that attains the highest possible creditor participation, reduces the risk of protracted litigation, and restores debt sustainability."

The IMF said Argentine economic performance has been bolstered by strengthened tax collection and restrained spending at the federal and local levels.

A number of key fiscal reforms need to be instituted in the coming months to increase economic policy and address systemic weaknesses in public finances, said Krueger.

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