Argentina agrees IMF plan

Argentina today moved closer to mending fences with international creditors after accepting the International Monetary Fund's conditions for renewed aid.

An agreement would end a year-long rupture between Argentina and the IMF, which cut off billions of dollars in funding in late 2001. The IMF's board is due to study on January 23 a joint letter of intent.

Argentina owes more than $11bn (?6.84bn) this year to international lenders. Under the deal, the IMF would give Argentina a three-year breathing space to pay back around $5bn in debt due in June. If the fund is satisfied with Argentina's economic performance between January and June, the IMF could also lend Argentina's ravaged economy enough cash to push back payments due in July and August. But there would be no new aid money.

In return, Argentina would have to meet several conditions, including hitting between 2-3% in economic growth.

The IMF also wants measures to underpin a tottering banking system after last year's currency devaluation and public debt default, a renegotiation of the public debt and a halt to political squabbling.

With half of Argentina's population living in poverty and reports of children starving in the north of the country, Argentina - a model of market reforms in the 1990s - desperately needs aid to help end a devastating five-year recession.

It's not clear whether Argentina will meet a debt payment of $1bn due to the IMF later this week. The country has already defaulted on World Bank debt and a $680m payment is due to the Inter-American Development Bank on Wednesday.

But the country is showing signs of revival. Its economy has grown for three consecutive quarters, inflation has been brought under control, the peso has stabilised and money is coming back into the banking system.

The IMF package would give an incoming Argentinian government, to be elected on April 27, breathing room to enact reform measures.