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Last Updated: Tuesday, 31 August, 2004, 22:52 GMT 23:52 UK
Protests at IMF Argentina talks
IMF managing director Rodrigo Rato
Mr Rato is a former Spanish finance minister
Protesters have clashed with police in Buenos Aires as Rodrigo Rato, managing director of the International Monetary Fund, talked with government leaders.

Mr Rato was meeting Argentine President Nestor Kirchner, as well as Finance Minister Roberto Lavagna.

Mr Rato urged Argentina to set aside more cash for debt payments.

But Mr Kirchner told the IMF head that it was highly unlikely Argentina would be setting aside more money to pay towards its defaulted debt.

Earlier Mr Rato said a budget was needed that deepens "the path toward stability" and "increases the state's financial capacity" in 2005.

As the pair talked dozens of people were arrested for throwing rocks and sticks, and four policemen were injured.

To force undeveloped economies to liberalise at an unhealthy rate is both foolish and unethical
Daniel Dunsford, Manchester, UK

Many in Argentina blame the IMF for their country's economic collapse in 2001 and 2002.

Analysts say the talks are aimed primarily at improving the IMF's relationship with Buenos Aries.

It is the first time that Mr Rato, a former Spanish finance minister, has visited Argentina since being appointed IMF chief in May this year.


"I'm not expecting too much from this," said Michael Gavin, chief Latin American economist at investment bank UBS.

"I suspect the broader purpose of the meeting is to establish some kind of face-to-face relationship between Rato and Kirchner that can create a high-level channel of communication."

According to Elliott Gotkine, the BBC's correspondent in Buenos Aires, Mr Rato can expect a "polite though not necessarily friendly welcome".

Argentine demonstrator
Argentina's economic collapse triggered widespread rioting

Relations between Argentina and the IMF have been strained since the international lender cut off support to the country in late 2001, forcing it to default on its foreign debts.

The default, the biggest ever by a sovereign nation, precipitated a devastating economic collapse which impoverished millions of Argentines.

The Argentine government has said the crisis was exacerbated by IMF-backed economic policies and lending programmes during the 1990s.

Last month, an internal IMF report acknowledged that its policies may have contributed to Argentina's recent economic woes.

Billion dollar question

Argentina has temporarily dropped out of a $13bn (7.1bn; 10.6bn euros) IMF loan programme aimed at helping it back on its feet, encouraged by signs that the economy is recovering.

But it is hoping that the lender will agree to delay repayments on $1bn of the $2.5bn that it is due to pay back by the end of the year.

The IMF, in turn, wants the Argentine government to shore up its finances through austerity measures which are likely to prove highly unpopular.

The Washington-based lender also wants to see some progress in Argentina's talks with private bondholders, who are owed some $100bn.

The government has offered to repay them 40 cents for each dollar it owes, but the proposal was rejected.

Some of the bondholders believe the government may improve its offer if it negotiates an extension of its repayments to the IMF.

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12 Feb 03  |  Business

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