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G-7: Argentina Must Reform its Budget - 2002-04-20


The world's seven richest industrial countries Saturday called on Argentina to implement needed financial reforms that can halt the country's decline and assure future prosperity.

Nearly one paragraph of a one-page statement issued after the Group of Seven meeting was devoted to the financial crisis in Argentina. The finance officials from Europe, North America and Japan say they are concerned about developments in Argentina and want to help. To remedy the serious problem, they say the Argentine authorities must reform the budget, including those of the provinces, establish a sound exchange rate system and improve bankruptcy laws. They say all will help lay a foundation for resumed economic growth.

U.S. Treasury Secretary Paul O'Neill stressed the measures require political courage. "To say, well, there are pre-conditions or post-conditions [for foreign help] is, frankly, beside the point. The issue is, is the political leadership of Argentina going to do the things that are necessary for its own people to have a bright and growing future? It's come down to that clear and simple issue," he said.

And overvalued exchange rate and mistaken financial policy choices triggered a financial panic that brought down the Argentine government at the end of last year. And the new government has not yet been able to stabilize the economy and restore confidence in the currency.

The Group of Seven countries say the IMF is prepared to support Argentina once a credible economic recovery plan has been put in place. Argentina is in its fourth year of recession with no early prospect of recovery.