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Tuesday, 24 September, 2002, 22:13 GMT 23:13 UK
Argentina threatens loan default
Economy Minister Roberto Lavagna speaking to journalists on Tuesday
Roberto Lavagna: IMF does not understand Argentina
Argentina has raised the pressure on international lenders to agree a new cash lifeline, threatening default if extra money is not forthcoming.

Economy Minister Roberto Lavagna said the government would rather miss debt repayments than cut deeper into spending on social welfare programmes, and financing for regional governments.

The absence of extra cash would leave Argentina hard pressed to divert some of its $9.5bn reserves to meet loan obligations due to the International Monetary Fund and World Bank, Mr Lavagna said.

A fresh aid deal represented the "only way" of avoiding default on the $329m due in coming months, he added.

Long-running spat

The comments came ahead of the IMF's annual meeting in Washington.

And they follow a long-running clash between fund and Argentine chiefs over fresh cash.

The IMF has claimed that the government of Eduardo Duhalde has failed to implement sufficient reforms to deserve extra loans.

IMF managing director Horst Kohler has blamed the Duhalde regime for the lack of accord, accusing it of acting like a family where no one can agree, Argentine newspaper Clarin reported on Monday.

But the Duhalde regime has accused the IMF of underestimating Argentina's economic promise.

"The economy has begun to stabilise, but it is hard for some (IMF officials) to digest this," Mr Lavagna said on Tuesday.

Positive signals included a rise in industrial production, and drop in interest rates.

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The BBC's Marcia Hughes
"Argentina has defaulted so badly its financial crisis is almost impossible to control"

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16 Aug 02 | Business
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