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Last Updated: Thursday, 25 March, 2004, 06:28 GMT
IMF owns up to Argentina errors
A demonstrator holds up an Argentine flag during an anti-IMF demonstration
Argentines still widely blame the IMF for their troubles
The International Monetary Fund has owned up to making mistakes in dealing with Argentina's 2001 debt crisis.

In a discussion paper, the IMF said its surveillance had missed warning signs and had over-estimated growth and the success of economic reforms.

Argentina's debt default in 2001 triggered an economic crisis, pushing half the population into poverty.

The default cut off international lending until 2003, when a fresh $13.3bn IMF loan package was agreed.

Many Argentines still blame the IMF for their continuing problems.

The country repaid the Fund more than $3bn (1.6bn) in arrears earlier in March, clearing the way for a fresh $3.1bn loan.


The IMF's examination of what happened in the runup to the implosion in 2001 says there was no single cause.

The deteriorating state of public debt as off-budget spending swelled combined with institutional weaknesses and the rigidities imposed by the pegging of the peso to the US dollar, it found.

It also said private lenders continued to pour money in despite evidence of mounting problems following the onset of recession in 1998.

But the IMF admitted it, too, failed to see the problems that lay ahead for a country which - till the meltdown - was often seen as an exemplar of IMF-mandated economic reform.

One problem, the discussion paper acknowledges, is that it failed to see how the actual structure of the Argentine economy was combining with the reform process.

Lessons could be learnt to help the Fund deal with future crises, it said, including paying more attention to the effect of exchange rates.

Argentina still owes about $88bn to private foreign creditors, and negotiations are proceeding slowly despite IMF pressure.

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