IMF ends visit to Argentina, government worried about savings

IMF ends visit to Argentina, government worried about savings drain

Agence France-Presse Beunos Aires

An IMF delegation ended its visit here Tuesday, warning that the door would be closed on international financial aid to Argentina unless the government imposes a series of tough fiscal measures.

And for the government of President Eduardo Duhalde, lack of accessibility to fresh funds will dry up its potential to fight the expected bout of inflation, with annual forecasts riding at 60 percent.

An Economy Ministry source said Argentina is only 200 million pesos short of the 3.3-billion-peso ceiling on the money supply this year, making the need for fresh sources of funding increasingly urgent.

The government's problem is exacerbated by an ongoing drop in revenue collections, the source said, speaking on condition of anonymity.

Earlier, Economy Minister Jorge Remes Lenicov announced at a news conference that Argentina was closing the gap on reaching its much-needed deal with the International Monetary Fund.

"We are far closer to reaching an agreement than we were a month ago ... but we are continuing to work on the issue of deficit targets," Remes said after meeting with the IMF's head of special operations, Anoop Singh, leading the fund's mission to Argentina.

Remes said outstanding differences between the two sides center on Argentina's target for its primary surplus -- excluding debt servicing -- which the government is seeking to reduce to 0.8 or 0.9 percent of gross-domestic product from the IMF's recommendation of 1.4 percent.

Duhalde is, meanwhile, caught between demands of the fund and other economic groups that Argentina apply free-market policies, and those of an increasingly desperate population.

Almost half of the 36 million Argentines now live in dire poverty as the nation weathers one financial strain after another.

Drastic hardship measures late last year led to riots and the ouster of two governments followed by the removal of the dollar- peso peg by Duhalde's government.

The ensuing devaluation of the peso brought a severe hike in the price of essentials such as bread and petrol. The combination of all this and strict limits imposed on bank withdrawals has put a heavy load on the public and the government.