Argentine Stocks Soar on IMF Loan
--News of an international bailout plan for Argentina sent the nation’s stocks soaring Wednesday and left President Fernando de la Rua upbeat about the country’s debt crisis.
But anti-government marchers returned to the streets just hours after the International Monetary Fund extended $8 billion to Argentina late Tuesday. Protesters said they remained concerned about the lack of signs of an economic recovery.
The IMF will lend Argentina$5 billion next month to strengthen reserves that were exhausted after Argentines, worried about a potential currency devaluation, pulled savings from banks.
An additional $3 billion will be extended if Argentina obtains an agreement with creditors to cut financing costs through a debt swap and possible debt buyback.
One idea is for Argentina to issue new, lower-cost bonds backed by U.S. Treasury securities the government would purchase.
Though some economists argued that the $8-billion loan gives the nation only modest breathing room in its struggle to avoid default on $130 billion in debt, investors pushed stocks sharply higher. Argentina’s main share index zoomed 8.2% to 328.37, though that just returned the index to where it was a week earlier.
In Brazil, the Bovespa index added 0.5%, while the Mexican market rose 0.9%.
“We should be very happy because this clears away the uncertainty,” De la Rua said Wednesday of the aid package.
Latin American leaders expressed concern in recent weeks that a failure by the IMF to give Argentina more financing would force a default and might trigger a broader regional crash. Mexican President Vicente Fox spoke to President Bush for about 20 minutes Wednesday. Fox and Bush “both expressed their desire for sustainability in the region,” White House spokesman Ari Fleischer said.
For many Argentines, there was little to celebrate: Billions of dollars in fresh aid, they said, does little in the daily battle to make ends meet as the country remains mired in recession. The government has enacted seven austerity plans since the elections in 1999, leaving many Argentines disgruntled.
