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Argentina President: We Need Bonds

April 6, 2002

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BUENOS AIRES, Argentina (AP) _ Argentina’s president said Friday the nation cannot withraw $1.8 billion worth of bonds being used as currencies despite demands by the IMF.

Argentina, which has defaulted on its $141 billion foreign debt, is seeking $25 billion in bailout funds to prop up the failing banking system and put the country on the road to recovery.

An International Monetary Fund team is in Buenos Aires, analyzing what the South American nation must do to receive the financial assistance. IMF officials have said Argentina must undertake more economic reforms and present a clear plan before aid can be released.

In the absence of funds, Argentina’s federal government and many of its 23 provinces have issued the bonds to pay salaries and keep basic services running.

The bonds make up a quarter of the money in circulation in the cash-deficient nation now in its fourth year of recession.

President Eduardo Duhalde said Friday it would be hard for Argentina to take the bonds out circulation before next year because the provinces ``cannot do anything″ without them.

The IMF, however, has demanded the nation withdraw the bonds before aid is released.

Economists have said continued use of bonds could fuel inflation and undermine currency stability. Unemployment is now 18.3 percent.

Provincial leaders, who met Duhalde Friday, said they would oppose any agreement forcing them to undertake more austerity.

``There’s no room for more cuts,″ Chubut governor Jose Luis Lizureme told reporters.

Despite the stalemate over the bonds, Duhalde said he expects Argentina will reach an accord with the IMF this month.

In January, Argentina devalued its currency after 11 years in which the peso was pegged 1:1 to the dollar.

Last month, the peso reached a low of four to the dollar, however the rate is now 2.75.

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