Argentina will not discuss a new IMF programme with the multilateral during next week's spring meetings in Washington DC, according to a spokesman for the country's economy ministry.
Asked yesterday whether Argentine economy minister Roberto Lavagna, who is due to attend the meetings, will hold talks on the issue with Fund officials next week, the spokesman told Emerging Markets: "No. The meetings in Washington are not intended for this discussion."
The spokesman went on to say that "no dates" have been set yet for a possible future programme. Initial discussions between Argentina and the IMF took place following the closure of Argentina's debt exchange in February, but nothing definite was agreed. "There are many things [to be settled]," said the spokesman. "The IMF is right now doing its Article IV and negotiations are just beginning." He also said that a new programme would depend on "the conditions of both the IMF and Argentina".
His comments come as the IMF is stepping up its pressure on the Latin nation. The resolution of outstanding claims
relating to Argentina's
debt exchange could become a possible condition of a new programme. IMF spokesman Tom Dawson told a press conference on Friday that "if there were a future Fund programme, the [Argentine] authorities would need to develop a realistic strategy to deal with non-participating creditors. Non-participating meaning those that did not participate in the swap of debt exchange."
Sources close to the government say that there is no clear strategy for dealing with the holdouts. IMF managing director Rodrigo Rato said recently in an interview with the FT that Argentina's strategy for dealing with those creditors "is part of the whole picture. I would not like to say that it is the only part of the picture...We will discuss the issue with the Argentine authorities among other issues."
Reports suggest that the IMF conditions will include a request for the Argentine authorities to raise their primary surplus target to 4.5% of GDP, up from the 3% target set in the 2005 budget. Such a condition may prove controversial, since even a 3% target was achieved after much wrangling. In an interview in day one of Emerging Markets, Lavagna said that "if reasonable policies are put in place, Argentina has the conditions to achieve 3%". But he did not delve into the possibility of a higher target.
The Fund is reported to have asked the Argentine authorities to adopt a more restrictive monetary policy to curb inflation and to float the peso. Completing negotiations with utility companies on tariff revisions is also likely to be a prerequisite of any future deal.