Argentina, IMF Make Deal to Ease Nation’s Debt Crisis

Argentine officials have reached an agreement with the International Monetary Fund to roll over $12 billion in debt, the government said Wednesday, easing a two-year debt crisis that helped bring down three presidents.

Argentina became a pariah to the international financial community when its spiraling debt and banking crisis forced President Fernando de la Rua from power in December 2001 and forced it to declare itself in default on $103 billion in public debt.

Under the terms of the agreement reached in a series of negotiations here and in Washington -- home to the IMF -- Argentine officials agreed to undertake a series of measures to stabilize the nation’s economy and transform its budget deficit into a surplus.

The government of President Nestor Kirchner will immediately tap into its reserves to make a $2.9-billion overdue payment on the debt.

Argentina had defaulted on the payment Tuesday, briefly placing it in a group of nations in arrears to the IMF that includes Liberia, Iraq, Somalia, Sudan and Zimbabwe.

The missed payment was the largest in the history of the IMF, the international lender of last resort.

IMF officials could not be reached for comment late Wednesday. Earlier, Thomas C. Dawson, the fund’s director of external relations, had said a final agreement with Argentina was close.

“Their payment is overdue,” Dawson said in Washington. “We are hopeful, however ... that this will be resolved soon.”

Kirchner was said to be meeting with Economy Minister Roberto Lavagna and other key members of his government late Wednesday to make final revisions to the agreement with the IMF.

During negotiations this week, Kirchner was reportedly holding out for better terms on a number of issues, including an IMF demand that Argentina allow private utilities to raise their rates. Those businesses, and many others here, have been hit hard by price freezes and the devaluation of Argentina’s currency, the peso.

Kirchner told an audience Wednesday at the launch of a federal housing program that although reaching an agreement with the fund was important for Argentina’s future, the country could “never again put a priority on solving the problems of those abroad.”

Argentina’s past efforts to make good with foreign creditors, the president said, had caused “an internal explosion.”

Kirchner took office in May after winning a narrow plurality in an election to replace President Eduardo Duhalde, whom Congress had appointed president in 2002 in the wake of the political and financial chaos that brought down De la Rua. Another president, Adolfo Rodriguez Saa, served for one week in December 2001.

Argentina is in its fifth year of recession. Officials reported this week that a tentative agreement with the IMF called for the government to run a budget surplus equivalent to 3% of its gross domestic product in the coming fiscal year.

The country’s $12 billion in payments to the IMF will be spaced over three years. The deal allows Argentina to begin restructuring the rest of its debt.