The Miami Herald
Sun, Feb. 08, 2004

G-7 chiefs decry debts of Argentina


  Finance ministers from the industrial democracies focus on Argentina's debt, while divisions about the dollar's slide are bypassed as the talks close.

  Deteriorating relations between Argentina and the International Monetary Fund have become a policy priority for the wealthy Group of Seven nations that concluded a two-day summit Saturday in Boca Raton.

  The top subject at the conference was the weak U.S. dollar, which has taken a particularly hard fall against the euro, but the G-7's final statement only alluded to volatile exchange rates.

  Meanwhile, the G-7, whose members are the United States, Canada, Italy, France, Germany, Great Britain and Japan, reflected alarm at growing rancor between
  Argentina and the IMF, which pledged tens of billions of dollars in aid to the country last September with Washington's encouragement.

  The IMF demanded sweeping changes in economic policy, including significant changes in Argentina's banking industry and a bigger budget surplus before debt payments are counted. Argentina has taken a strong public stand against those conditions.


  The two sides are to meet in Miami this week, and the outcome could determine whether Argentina makes a scheduled $3 billion payment to the IMF next month.

  ''We concluded that it's awfully important that Argentina live up to its agreements with the IMF and put themselves in compliance with the IMF program,'' U.S. Treasury Secretary John Snow said in a press conference at the elegant Boca Raton Resort & Club. Asked if that meant Argentina isn't in compliance, Snow said he would reserve judgment until a review is completed next month. ''The important question is, where will they be in March?'' he said.

  Argentina has already defaulted on roughly $88 billion in bonds, although that debt is privately held and doesn't directly affect the IMF loans. Argentina announced a default on IMF loans last September but recanted a day later and new terms from the IMF were announced.

  The dollar's hard fall against the euro drew the most attention from the finance ministers in Boca. It has helped make U.S. goods cheaper overseas, strengthening
  American exports. But the 12 countries in the so-called Eurozone say it has pummeled their exports and threatens a nascent recovery there.

  France, in particular, had been expected to press for strong action to boost the dollar at the Boca summit. But late Saturday the ministers issued a statement that
  criticized only ``excess volatility and disorderly movements in exchange rates.''


  The statement said the ministers ''continue to monitor exchange markets closely and cooperate as appropriate,'' a noncommittal stance that essentially allows
  Washington to maintain its hands-off position on the dollar's slide.

  The G-7 ministers also repeated a call made last September at their meeting in Dubai, which subtly suggested Japan and China should let their undervalued currencies

  Finally, the conference received ministers from Afghanistan and Iraq, who discussed efforts to rebuild their postwar economies. For Iraq the issue is complicated by a crippling level of foreign debt.

  ''Under Saddam Hussein, the [finance] ministry functioned more as a disburser of cash for the regime's pet projects than as an operational finance ministry,'' Kamil
  Gailani, the country's finance minister, said Friday, beseeching the international community to provide aid for the country's reforms.