Argentine rescue package far from guaranteed

Click to follow
The Independent Online

There were renewed fears yesterday of a setback for a $1.3bn (£915m) aid package being put in place for the troubled Argentine economy, after a delegate from the International Monetary Fund left the country earlier than expected.

The return to Washington of Thomas Reichmann, who headed an IMF mission to the debt-ridden country, prompted speculation among analysts that aid designed to help the government service its $132bn debt mountain was far from guaranteed.

Any aid award by the IMF would make it easier for Argentina to persuade investors to accept a debt restructuring proposal whereby high interest rate bonds are swapped for ones with lower rates and longer maturity dates.

However, Argentine bonds rebounded yesterday as hedge funds moved to cover short positions.

Earlier, Argentine interbank dollar interest rates opened at between 20 and 25 per cent, stabilising from the 75 per cent levels touched last week amid fears of a devaluation. Since then, a cap of $250 per week on cash withdrawals from banks has been implemented and curbs introduced on sending money abroad. The measures will not be lifted until the end of February at the earliest. Lending in the Argentine peso, whose peg to the dollar is looking increasingly vulnerable, has also been banned.

Comments