The Rumour Mill: Argentina Looking For Chums

The participation of President Cristina Fernandez de Kirchner in the London G20 summit may have been a preamble from the country to repair its relationship with the IMF, according to press reports in the Buenos Aires.

La Nacion points out that the long G20 statement in one of its chapters refers to the "IMF surveillance of G20 economies and financial sectors", which was signed by Mrs. Kirchner in spite of the virulent rhetoric both from her and husband former president Nestor Kirchner, who blame the IMF for most of the Argentine economy shortcomings.

The article says "we will conduct all our economic policies cooperatively and responsibly with regard to the impact on other countries and will refrain from competitive devaluation of our currencies and promote a stable and well-functioning international monetary system. We will support, now and in the future, to candid, even-handed, and independent IMF surveillance of our economies and financial sectors, of the impact of our policies on others, and of risks facing the global economy".

The Kirchners Argentina virtually has no relations with the IMF since the country paid back to the multilateral organization all its pending debts a few years ago, borrowing the money instead from neighbouring staunch ally Venezuela in a deal personally arranged by Hugo Chavez.

Argentina has since refused any surveillance of its economy. This attitude and the holdouts from the massive restructuring of the defaulted 2002 debt have left Argentina with virtually no access to international money markets. It has been able to manage up until now with strong trade and budget primary surpluses from a booming economy benefited with international windfall prices for commodities. But circumstances since last year have changed dramatically.

According to La Nacion the Kirchners have had an enforced change of heart and recently contacted the Ministry of Economy to confirm the support of "IMF surveillance" Article IV.

Subsequently in late February David Hawley, spokesperson for the IMF, said "We are very interested in a close relation with Argentina", adding that in the coming months the "Article IV consulting process will take place normally".

In related news another Buenos Aires daily which specializes in financial news Ambito Financiero, said that the administration of Mrs. Kirchner is seeking a 10 billion US dollars line of credit from the US Federal Reserve.

"Government officials are looking for US credit after lining up a currency swap with China for the same amount in a deal announced March 30", the Buenos Aires-based newspaper said, without identifying the source of its information.

However "the US government may be unwilling to extend the line of credit given that Argentina has yet to clear its defaulted Paris Club debt," the newspaper said.