The International Monetary Fund is expected to approve a $3.1 billion loan payment to Argentina when its board meets on Monday, but with stern warnings to Buenos Aires to stick to a commitment to resolve differences with foreign creditors.
The 24-member executive board, chaired by acting IMF Managing Director Anne Krueger, will evaluate whether Argentina has met a checklist of economic and other targets agreed in a September $13.3 billion loan program to help the country recover from its 2001 sovereign debt default, the world's largest.
Argentina's stocks closed at record highs on Friday on optimism the IMF would approve the payment.
In the last IMF review in January, eight countries, including Italy, Britain and Japan, abstained from a vote approving new money for Argentina because of anger over how the government was dealing with other creditors.
They said Argentina had not made credible efforts to begin negotiations with the holders of $88 billion in defaulted bonds. The creditors have rejected Argentina's debt restructuring proposal to write-down the face value of the debt by 75 percent.
On March 10, after a tense stand-off with the IMF over the debt restructuring issue, Argentina agreed to sit down with all creditor groups - but on condition the IMF kept aid flowing.
"Argentina has mastered the art of doing just enough to get by," said one IMF insider.
"I think the fact that they have, at long last, made more specific commitments to negotiate with creditors will be seen as progress. Certainly it will make it more difficult to argue that they are not negotiating in good faith," the source said.
Argentina's latest commitments to negotiate with bondholders appeared to appease shareholders.
Italy and Sweden, which abstained on previous reviews, said last week they would back Argentina this time, but warned they expected rigorous implementation of the latest agreement.
Randal Quarles, US deputy under-secretary, recently told the US Senate Banking Committee the United States would ensure the IMF's focus stayed on Argentina.
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