UPDATE 1-IMF says Argentina should play by club rules

(Updates with Argentina comment, incorporates ARGENTINA-DEBT, adds byline)

By Axel Bugge

ISTANBUL Oct 4 (Reuters) - The International Monetary Fund told Argentina on Sunday its refusal to allow fund experts to review its economy is "somewhat odd," saying that when you are part of a club you should play by common rules.

Argentina ended a standby agreement with the IMF in 2005 and the fund has not been able to carry out a normal annual review of its economy since 2006 as it does every year for almost all its member countries.

Argentina has also been shut out of international debt markets, largely due to lawsuits, since it defaulted on $100 billion debt during the country's economic crisis of 2001/02.

"Well, Argentina is a member of the fund and a member of the G20," the IMF's Western hemisphere director Nicolas Eyzaguirre told reporters at the semiannual meeting of the IMF in Istanbul.

"Those clubs are clubs where you participate and discuss your policies with the others," he said. "So participating in the club and hearing what the others are doing but not telling the others what you are doing is somewhat odd."

Argentina's relations with the IMF have been sensitive for years because the IMF is widely blamed by Argentines for having encouraged policies and a debt overload that later played a part in the country's 2001/2002 economic meltdown.

Argentine Economy Minister Amado Boudou signalled this week the country was preparing to now seek a review from the IMF. He told the International Monetary and Financial Committee in Istanbul on Sunday that Argentina is preparing to reenter international markets as well.

"To strengthen the benefits of our macroeconomic policy framework, bolstering a sustained and inclusive growth, solid productivity gains and even high levels of investment, Argentina is moving toward re-entering the international financial markets," he said.

French Economy Minister Christine Lagarde told reporters at the IMF meeting separately that Argentina needs to be in an IMF programme to conduct talks on restructuring its debt with the Paris Club of creditors.

Argentina owes $6.7 billion in defaulted debt to the club and needs to resolve the issue as part of its efforts to get relations with the international financial community back on track.

Boudou said Argentina had weathered the global crisis well, predicting economic growth of 0.5 percent this year and 2.5 percent in 2010.

"The crisis has revealed the resilience, strength and advantages of our macroeconomic policy framework instituted since 2003," he said.

IMF Managing Director Dominique Strauss-Kahn said on Friday he hoped the fund would be able to resume a "normal relationship with Argentina" in the short term.

Eyzaguirre said Argentina should allow a review "because you are supposed to benefit from knowing what others are doing and the others benefit from knowing what you are doing."

"It is a duty of the country to show to other countries what its policies are," he said. "It's an exercise where you review together with others what it's doing."

Boudou said this week Argentina is waiting for the right moment to resolve lingering issues from its debt default. (Reporting by Axel Bugge; Additional reporting by Anna Willard; Editing by Ruth Pitchford)