President Bush is backing a plan to more than double Argentina's economic rescue package. U.S. officials say part of the solution is expanding trade.
The International Monetary Fund will offer $8 billion in new loans for the Argentine economy. That is on top of a $14 billion bail-out package supporting efforts to cut government debt.
White House spokesman Ari Fleischer says President Bush supports the move, a decision he discussed Wednesday morning in a telephone call with Mexican President Vincente Fox. "President Bush and President Fox talked about their desire for sustainability in Argentina," he said. "They talked about the importance of working with Argentina and the IMF to find a solution to Argentina's economic difficulties and they welcomed the movement by the IMF on this topic."
Argentine stocks soared on the news of the IMF package with the country's benchmark index up more than five percent. President Fernando de la Rua has been under pressure as South America's second-biggest economy suffers through its third year of recession. Unemployment is above 15 percent. Consumer spending is down.
The new loans come with conditions set by U.S. Treasury Secretary Paul O'Neill that investors exchange old debt for new securities backed by the international community. The Bush Administration has also promised to launch trade talks that could open American markets to more products from Argentina, Brazil, Uruguay and Paraguay.
The IMF says $5 billion of the new $8 billion worth of loans could be available immediately. The balance will come if President de la Rua makes progress on reducing $130 billion of government debt. His administration has promised to fully implement austerity spending cuts, reform the way the central government shares tax revenues with the provinces and strengthen public banks.