Argentina needs IMF plan to restructure debt: France

ISTANBUL (Reuters) - Argentina needs to be in an International Monetary Fund program to conduct talks on restructuring its debt with the Paris Club of sovereign creditors, French Economy Minister Christine Lagarde said on Sunday.

Argentina owes some $6.7 billion in defaulted debt to the club. It wants to resolve the issue as part of an effort to get relations with the international community back on track after the country's 2001-2002 economic crisis.

The country can either repay the debt in full, or seek a restructuring, which usually requires a country to be in an IMF program.

The Paris Club is based in the French finance ministry and France is also one of Argentina's sovereign creditors.

"Our teams will work together but nothing has been done," Lagarde said on the sidelines of the semiannual IMF meetings.

"We are starting to talk to each other under certain conditions, notably of course within the framework of an IMF program and under the usual conditions."

Argentine Economy Minister Amado Boudou has said it was out of the question to pay down the debt using cash.

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.

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 the Argentine economy since 2006 as it does every year for almost all its member countries.

Earlier on Sunday, the IMF told Argentina that its refusal to allow fund experts to review its economy was "somewhat odd," saying that when you are part of a club you should play by common rules.

Argentine Economy Minister Amado Boudou said this week that Argentina is now seeking a review from the IMF, which had been seen by some observers as key to a Paris Club debt restructuring.

However, Lagarde's comments imply that the Paris Club will stick to its rule that a country needs to be following an economic program endorsed by the IMF before a restructuring can take place.

Argentina has been shut out of international debt markets since its economic crisis, largely because of lawsuits from holdouts trying to recover losses after the country defaulted on $100 billion in bonds.

(Reporting by Anna Willard; Editing by Tim Ahmann)