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Tuesday, 30 July, 2002, 05:49 GMT 06:49 UK
Argentina 'must make sacrifices'
Protests in Argentina
Argentines are angry at their plunge into poverty
A group of experts have ended their tour of Argentina by saying more belt-tightening is necessary to drag the country out of its financial crisis.

"Sacrifices will be needed, probably beyond those with which society has already come to terms," the panel concluded.

The International Monetary Fund (IMF) appointed the group of four top international bankers to act as middlemen in its talks with the South American country.

Argentina has been negotiating with the IMF for months, desperate to secure new loans to help it on its course to recovery.

Since last December, Argentina's financial difficulties have included a currency devaluation, a default on international debt, soaring unemployment and a freeze on savings withdrawals from banks.

That in turn has led to deep social unrest, with almost daily protests on the streets of Buenos Aires and the ousting of previous governments.

No pain, no gain

The current Argentine government is desperate to re-establish order and help its people cope with rising poverty.

Argentine President Eduardo Duhalde
President Duhalde is desperate to calm social unrest
But it is also forced into painful measures to put its financial house in order and win the favour of the IMF.

A freeze on the withdrawal of savings from bank accounts is particularly unpopular.

But its removal risks a run on the banks which are already on the point of collapse.

Finance Minister Roberto Lavagna welcomed the panel's report, saying it endorsed the general direction of his economic policy.

The IMF's chief, Horst Koehler, also welcomed the group's conclusions, and underlined the importance of the adoption of a "credible monetary anchor" to prevent hyperinflation.

Central bank experience

Analysts say the IMF is being especially tough on Argentina following its default, as many reforms promised in the past have failed to materialise.

Argentina is hoping to unlock $9.5bn (6bn) of IMF funds which have been frozen since December.

Mr Koehler has said the IMF is prepared to establish a new loan programme for the country as soon as the authorities are in a position to ensure the implementation of sound monetary policies.

The delegation was led by Andrew Crockett, managing director of the Swiss-based Bank for International Settlements, which sets standards for central bankers.

The other three members are all former heads of central banks in Germany, Spain and Canada.


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16 Jul 02 | Business
05 Jul 02 | Business
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