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Saturday, 4 August, 2001, 01:22 GMT 02:22 UK
IMF speeds up cash for Argentina
![]() US envoy Taylor, left, has welcomed the IMF decision
The International Monetary Fund has announced that it will speed up disbursement of a $1.2bn loan to Argentina, to try to tide the country through the coming months and stave off bankruptcy.
The announcement comes after the leaders of the United States, Britain and Spain issued statements supporting austerity cuts by Argentina's President Fernando De La Rua.
The IMF has also announced a $15bn credit line for neighbouring Brazil, whose currency has been badly buffeted by the crisis in Argentina. Investors sceptical The austerity cuts announced last month take 13% off the salaries of state workers and pensions and have sparked strikes and demonstrations in Argentina. But it now appears the cuts may need to be larger, if the government is to keep its zero deficit policy. Our correspondent says many investors appear to be betting that Argentina will not be able to keep up on its debt payments. But the Argentine government has accused Wall Street of speculating on an economic collapse, which would almost certainly lead to a devaluation of the Argentine currency. Support for austerity plan US President George Bush , UK Prime Minister Tony Blair and Spain's Jose Maria Aznar on Friday agreed to support Argentina's austerity programme, but did not offer the beleaguered country any extra cash. "They are all agreed that the focus should remain on the current [IMF] package," a spokesman for Mr Bush said. The backing came as US Treasury official John Taylor flew to Buenos Aires for talks on Argentina's economic situation, which has threatened to prompt regional and even global economic instability besides domestic unrest.
"I was happy to hear that the IMF has recommended an accelerated disbursement to Argentina," the statement said. Earlier on Friday, Argentine Finance Secretary Daniel Marx said Mr Taylor's visit heralded the granting of "reinforcements" to current loan facilities. Mr Marx also claimed to have noted a European "willingness to assist [Argentina] as required". Brazil credit line After announcing the plan to accelerate Argentina's loan, the IMF Managing Director, Horst Koehler, said he would also recommend the creation of a new standby loan arrangement of $15bn for Brazil. "The Brazilian authorities are strengthening fiscal and monetary policies and implementing their structural reform agenda in the face of a difficult external environment," Koehler said in a statement. The announcement follows a week of talks in Washington between a team of Brazilian economic officials and officials from the IMF, World Bank and the US Treasury Department. Mr Koehler said Brazil could begin receiving loans in September, with the first instalment expected to total $4.6bn.
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