Going for Broke
Argentina extracted a favorable deal from the IMF but its victory could be short-lived if the country fails to address critical policy weaknesses.
Say what you like about Néstor Kirchner, but
Argentina's president has shown the world he knows how to
negotiate. He rightfully claimed victory over the International
Monetary Fund in September before proceeding to make a
predictably aggressive offer a few weeks later to bondholders
sitting on $75 billion in defaulted Argentine government debt.
Kirchner had a strong hand and played it well. Argentina is
growing again as it emerges from the wreckage of the 2001-2002
crisis. Its president is hugely popular at home and key western
governments, led by the US, were fed up with the IMF's
fruitless hardline tactics against Argentina and pushed it
toward a more conciliatory position. Armed with an undemanding
three-year IMF deal, Kirchner and Economy Minister Roberto
Lavagna believe they have little to lose in talks with
bondholders. Lavagna made an aggressive opening bid to
bondholders during the IMF/World Bank meetings in Dubai in late
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