IMF: Argentine deal with creditors will be reached in mid-2004

The Deputy Managing Director of the International Monetary Fund Anne Krueger said Friday that "there is optimism" in both parts to reach an agreement for debt restructuring of Argentina's debt. Speaking in Dubai ahead of the IMF and World Bank Annual Meetings she predicted the deal will be reached in the first two or three months of 2004.

IMF Managing Director Horst Köhler stated earlier that the agreement with Argentina is a good deal and that it will probably contribute to the country's recovery. He confirmed the Fund's executive board will approve the agreement on Saturday.

He also urged Europe and Asia on Friday to boost domestic demand to balance global growth and repeated that China needed to make its yuan exchange rate more flexible, but said it shouldn't be bullied.

"It is important that a common solution is found to strengthen the fragile (global economic) upturn which is being carried mainly by the United States," Köhler said, adding that Asia and Europe should boost domestic demand rather than focus solely on exports. "When only exports are booming, I ask myself who's buying all that stuff," he said.

Köhler also repeated IMF calls for the United States to rein in its burgeoning current account and budget deficits, and said the failure of World Trade Organisation talks in Cancun, Mexico, was a "wake-up call" for developed countries.

"Their rhetoric alone is not enough. They have to follow words with acts," he said, adding industrialised nations should try to re-establish negotiations.