UPDATE 3-Argentina says Paris Club agrees talks without IMF

Mon Nov 15, 2010 7:33pm EST

Related Topics

* President says creditor nations will not demand IMF role

* Paris Club had previously demanded usual IMF monitoring

* Fernandez blames IMF for precipitating 2001-02 crisis (Adds background, analyst comment, byline)

By Helen Popper

BUENOS AIRES, Nov 15 (Reuters) - The Paris Club group of nations has accepted Argentina's demand to negotiate repayment of the country's $6.5 billion debt without IMF monitoring, President Cristina Fernandez said on Monday.

The unresolved debt is seen as one of Argentina's remaining obstacles as it seeks to clear up lingering fallout from its 2001-02 economic crisis, when Latin America's No. 3 economy defaulted on $100 billion in sovereign debt.

Argentine stocks and bond prices have risen in recent days on expectations that a Paris Club repayment deal was close.

"The Paris Club, with whom we still have a debt in default ... has accepted the Argentine position to negotiate our debt without the intervention of the IMF," Fernandez said in a televised address.

Center-left Fernandez, a fierce critic of the International Monetary Fund, said Argentina would only accept a repayment plan that did not "cause restrictions to our model of economic growth and social inclusion."

She said a deal should be sealed by the end of next year.

Monday's announcement marks a victory for Fernandez less than a year from a presidential election in which she is seen as a potential candidate. Accepting monitoring by the IMF would have been politically unpalatable ahead of the vote.

Argentine officials blame the IMF for helping precipitate the country's devastating 2001-2002 economic crisis. Argentina has not allowed the IMF to conduct routine annual evaluations of its economy since 2006.

Argentina has long said it will not accept the usual economic monitoring by the IMF as part of a repayment deal with the group of creditor nations, which includes Germany, Japan and the United States.

Economic analysts said Monday's announcement was good news for Argentine assets.

"This announcement should be positive for the market and we should see a rally (in Argentine debt) tomorrow," said Credit Suisse analyst Carola Sandy.

"The positive aspect of this announcement is that, according to Argentina, the Paris Club has agreed to negotiate without the IMF. But this is not something that we'll see resolved overnight."

Fernandez gave no further details of her government's repayment offer.

Earlier on Monday, C5N television said the government would offer to repay the debt over a three-year period with economic monitoring by the Group of 20 states.

Yields on Argentine bonds have tightened this year following the conclusion in June of a $12.3 billion swap in defaulted bonds, which was seen as another key step if the government is to tap global credit markets. (Additional reporting by Alejandro Lifschitz in Buenos Aires and Walter Brandimarte in New York; Editing by Leslie Adler) (helen.popper@thomsonreuters.com; +54 11 4318 0655; Reuters Messaging: helen.popper.reuters.com@reuters.net))

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