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IMF: No New Loan Until Argentina Comes Up with Viable Recovery Plan - 2002-08-30

The International Monetary Fund says Argentina is not ready for an emergency loan, and that problems remain. Fund officials responded Thursday to Argentina's request for a bailout.

Leaders in Argentina were not surprised by the news from Washington, where IMF spokesman Thomas Dawson said there were widespread problems that need to be resolved before agreement can be reached on new loans.

He said the country has made some progress looking for a way out of its economic crisis, but the problems remain too widespread. He said talks will continue.

Argentina is struggling to climb out of the hole it fell into last year, when it defaulted on $141 billion in foreign debt. Since then, inflation and unemployment have skyrocketed, the peso has lost more than 70 percent of its value, and Argentina's economy and banking system have been on the verge of collapsing.

Nearly two weeks ago, Argentina's leaders sent a request to the IMF for an emergency loan.

President Eduardo Duhalde blamed the delay on other politicians, who insist Argentina can get by without international help.

Economy Minister Roberto Lavagna blamed a court decision abolishing pay cuts for state employees, which the government says would have saved more than $2 billion a year.

The IMF has insisted that Argentina must cut spending and come up with a viable recovery plan, before it is eligible for a loan.

President Duhalde has said, without a loan, it could be impossible for Argentina to survive the worst economic crisis in its history.