Economic woes prompt Argentina rethink on IMF

BUENOS AIRES, Aug. 21 (UPI) -- Argentina's deepening economic woes have prompted a rethink by President Cristina Fernandez de Kirchner of a policy that saw the country almost pull out of the International Monetary Fund three years ago.

However, government consensus on what to do with the IMF remains elusive. Former President Nestor Kirchner, an influential figure behind his wife the president, rules out resumption of Argentine ties with the IMF, but Economy Minister Amado Boudou indicated a rethink and is most likely to hold further meetings with senior IMF officials.

Argentina suspended contacts with the IMF, blaming the Fund for its economic crisis before the recovery began in 2005-06.

As THE economy shrinks with lower growth in the second quarter of 2009, partly in response to the global recession, government cash seems in short supply, stifling development projects as well as urgently needed spending on military and civil infrastructures. Argentine analysts see a rekindled IMF membership and re-entry into the capital markets as a possible way out of increasing difficulties in the months ahead.

The economic troubles have already cost Fernandez Parliament seats in the June election, and farm strikes before the polls have eroded her popularity among rural communities. Kirchner resigned as head of the dominant Peronist Party, further weakening the couple's hold on power.

Boudou, quoted in La Nacion newspaper, said Argentina could be approaching a meeting point with the IMF but ruled out any discussion on the government's economic policies as a sequel to enhanced contacts.

IMF officials in Washington welcomed comments from the Argentine capital and hoped it would open channels for a full review of the country's economy, not done since 2006.

An IMF spokesman told United Press International, "Argentina has always been a full member of the IMF and relations are normal. The Argentine government even has its own representative seating at the IMF's Executive Board."

Boudou told reporters Argentina held frequent "technical discussions" with the IMF but had not asked for financial assistance. Analysts said this seemed likely to change as Argentine officials arranged talks with senior Fund officials.

Earlier in February, IMF spokesman David Hawley told a news briefing the IMF is interested in resuming dialogue with Argentina.

"In the context of the global crisis we are working closely with all our members and are interested in deepening our dialogue with Argentina," he said.

Hawley said the Fund would also conduct an assessment of Argentina's economy under Article IV of the IMF agreement but did not specify a timetable.

An Article IV consultation and fact-finding missions for annual reviews of economic performance in member countries are routine IMF activities, but none has been conducted in Argentina for the past few years of the strained relationship.

Opposition to the IMF lingers in high places in Argentina, because of its perceived role in the economic crisis from 2000 onward. Nestor Kirchner told a political rally in February Argentina would not return to the IMF for funds even if it was handed the money free.

He repeated calls for IMF reform, implying a lesser IMF role in economic policymaking by the member states, and said Argentina would reconsider its participation if there was change.

"But in the current circumstances, they can keep the money, because they've already done too much damage to Argentina," he told his followers.

Kirchner was president when, in an escalating row over alleged IMF intervention in policymaking, Argentina dipped into its central bank reserves to pay off the Fund on loans that were not fully due for repayment.