Press Release No. 02/51

The Executive Board of the International Monetary Fund (IMF) today approved a request from Argentina to extend by one year the repayment expectation of SDR 105.9 million (about US$ 141 million) which arises on November 22, 2002 under the Supplemental Reserve Facility (SRF).

The IMF approved financing for Argentina under the SRF as part of a stand-by arrangement on January 12, 2001 (see Press Release No. 01/3) to ease a short-term financing constraint. Repayment of an SRF is normally expected in two installments made at one year and at 1½ years after the SRF disbursement, the latter installment of which, in the case of the disbursement made to Argentina on May 23, 2001, would be on November 22, 2002. A borrower may request an extension of up to one year of the expected repayment period under the SRF. An extension can be granted if repayment would cause undue hardship and provided the borrower is taking actions to strengthen its balance of payments. At the end of the extension the country is obligated to repay the SRF financing.

In commenting on today's decision by the IMF Executive Board, Shigemitsu Sugisaki, Deputy Managing Director and Acting Chairman, said:

"Executive Directors agreed to the Argentine authorities' request for an extension of the repurchase expectation of SDR 105.9 million that arises on November 22 under the Supplemental Reserve Facility. Directors recognized that the economic and social situation in Argentina remained difficult and that the shifting of the SRF disbursement to an obligations basis would signal again the Fund's commitment to help Argentina. Directors were concerned that it had not been possible so far to reach agreement on an economic program that could be supported by the Fund. They noted that progress had been made in some areas toward formulating such a program, but also that there remained a number of important issues still to be resolved. Directors expressed the hope that understandings on the open issues could soon be reached.

"Directors regretted Argentina's decision to fall into arrears with the World Bank and called for speedy normalization of the arrears to the World Bank," Mr. Sugisaki said.

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