IMF accused of 'going soft' over Argentina debt bail-out

The decision by the International Monetary Fund to bail Argentina out of its latest debt crisis has been fiercely opposed by a number of member countries who accuse the global watchdog of going soft on the Latin American state.

Four executive directors on the IMF's board of governors refused to back the decision.

Directors representing Australia, the Netherlands, Switzerland and the Nordic countries abstained in the vote to approve a $12.6bn (£7.9bn) credit line.

The decision was greeted with dismay by some members of the Group of Seven (G7), which only six months ago hammered out an action plan intended to control the terms under which the International Monetary Fund lent money to countries in distress.

One senior G7 official described the deal as "depressing", given that Argentina had failed three out of the four criteria under the plan. "We talk about the need for structural discipline and then we provide official finance that is not that in any sense of the word."

Anoop Singh, director of the fund's western hemisphere department, said the deal included necessary reforms in key structural areas such as the fiscal position, the debt situation and the banking system that would revive and restore confidence and sustained growth in Argentina.

"I would not look at this programme with Argentina from the dollars and cents point of view," Mr Singh said. "That is completely missing the focus."

The board said in a statement after rubber-stamping the deal: "The authorities have committed to primary surpluses in subsequent years that ensure a sustainable fiscal position over the medium term."

One of the main concerns for Europe is the thousands of individual European investors who fear deep cuts to the face value of the Argentinian bonds that they hold when Buenos Aires formally launches negotiations next week to restructure $90bn in outstanding obligations.