IMF Chief Contradicts Menem: Argentine Loan Not Approved

BUENOS AIRES - A $3 billion extended-fund-facility loan that Argentine officials seem to take for granted is a long way from being approved, the head of the International Monetary Fund said in an interview.

"How is it going to have been agreed on if we have only just begun to negotiate it?" Michel Camdessus asked a reporter last week. The reporter was interviewing Mr. Camdessus for the newspaper Clarin, Argentina's largest.

Menem's Claim

During his visit to the United States in November, President Carlos Menem said repeatedly that virtually all the conditions for loan approval had been met.

"The government is going to accumulate ... about $5 billion" by early next year to finance its entry into the U.S.-sponsored Brady plan for foreign debt reduction, Mr Menem said on his return.

The reference implicitly included the IMF loan, the receipt of which the government presented as a major accomplishment of the U.S. trip.

Economy Minister Domingo Cavallo reacted angrily to the Clarin report.

|There Is No Contradiction'

"At no time did the President affirm the loan had been granted," Mr. Cavallo said. "There is no contradiction between President Menem and the director of the IMF, Michel Camdessus."

Talks with Mr. Camdessus last Wednesday were to focus on Argentina's compliance with terms of a letter of credit that resulted in a $1 billion loan. The second disbursement of $240 million, scheduled this month, hangs in the balance.

The Menem government now pays $60 million a month on its foreign debt - a fraction of what it owes on its $60 billion foreign debt.

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