Argentina secures $1bn loan reprieve

The International Monetary Fund gave Argentina an 11th hour reprieve yesterday from joining the world's deadbeat debtor countries when it rolled over a $1bn loan repayment due today.

The fund announced an interim deal last night with the crisis hit economy which will reschedule around $5bn of repayments due ahead of April's presidential elections.

Yesterday's announcement comes after concerted pressure from the fund's big shareholders, including Britain, the US, France and Germany to end the tortuous negotiations which have dragged on since the fund cut off lending to Argentina in December 2001, triggering an economic meltdown.

The details of the package are expected to be revealed later today, but a spokesman for the fund confirmed yesterday that there would be no fresh money for Buenos Aires until negotations restart with the new administration. The IMF blames government profligacy for Argentina's problems and strict controls on spending are likely to be a condition of any future lending. Analysts said the fund's decision to roll over its loans represented the absolute minimum the Washington based lender could have done to prevent the country's crisis from deepening.

Failing to make repayments would have placed Argentina on the short list of countries excluded from international financial markets, including Iraq, Sudan, Liberia and Zimbabwe.

A spokesman for the fund said the deal would be aimed at providing "breathing room" for Argentina's economy ahead of upcoming elections in the hope that a longer-term arrangement could then be negotiated with the new government.

Analysts said yesterday's deal at least kept alive hopes of a longer-term accord. "It is positive that there is a deal coming out, it's a good sign for the international markets," said Camilo Tiscornia, an economist at Orlando Ferreres and Associates in Buenos Aires. "I think the deal is a little forced," he said, citing several issues sought by the IMF which have not been addressed, including court orders releasing frozen bank deposits and increases in public utility charges.