Argentina set to lose IMF loan

DEBT-WRACKED Argentina is unlikely to receive a financial bail-out from the International Monetary Fund, sources said, leaving the country facing a possible return to hyperinflation and economic chaos.

A delegation from the IMF has just arrived in Argentina to decide whether to grant the country fresh aid, but fund sources said the 7 billion remaining under an existing but frozen 15bn loan package would not be released.

Instead, Argentina would only receive enough financing to pay back what it already owes the Washington-based lender this year - about 3.5bn.

"What they have to do, they can do it alone," one source at the IMF said, "This is a case where what they need is adjustment, it is not financing. This is for their own good and they should understand that."

Before the IMF team arrived, hopes had been high in Argentina that the talks would lead to the resumption of international aid after the IMF froze funds in December after the country failed to keep spending in check.

But the IMF sources said the talks were more concerned with ways to build a foundation for a credible economic platform.

The toll of the economic crisis on Argentina has been heavy. Since December, the government has fallen after riots left 27 dead and the economy has ground to a standstill.