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The Associated Press November 15, 2010, 8:33PM ET

Argentina: Paris Club agrees to debt talks, no IMF

The Paris Club has agreed to talks on renegotiating $6.5 billion in outstanding Argentine debt without the participation of the International Monetary Fund, President Cristina Fernandez said Monday.

Settling the debt would help the South American nation emerge from default and regain access to international credit markets closed off since a devastating 2001-2002 crisis, when it defaulted on a record $95 billion in debt.

Argentina had sought to have the IMF excluded from the negotiations; Fernandez and many others in Argentina blame the institution in part for the country's collapse a decade ago.

"We received an e-mail from Paris that was later confirmed by letter, in which the Paris Club ... has agreed to Argentina's request to negotiate our debt without the intervention of the International Monetary Fund," the president said in a message broadcast nationwide.

Fernandez did not say how Argentina plans to pay off the debt, but the government has tapped Central Bank reserves in the past to pay private creditors and the IMF.

"The negotiation must be realistic for Argentina, with a payment schedule that allows continued support of economic growth with social inclusion," Fernandez said.

She said the goal is to reach a deal by early 2011, effectively ending Argentina's default.

"It took us exactly one decade," Fernandez added.

In December 2001, in the middle of a spectacular economic meltdown, provisional President Adolfo Rodriguez Saa ordered the cessation of payment on public debt that at the time totaled $95 billion.

More than three-quarters of private creditors agreed in 2005 to restructure debt that, with interest, was now valued at some $102 billion.

More investors struck a similar deal earlier this year, and only a small percentage of bondholders are still pressing claims against Argentina in international courts.

Fernandez said back in 2008 that Argentina would cancel its Paris Club debt, but talks were delayed by the world financial crisis and the group's reluctance to negotiate without IMF oversight.

The Paris Club is a group of lenders mainly comprising European nations.

Germany controls 30 percent of the Argentine debt, Japan 25 percent, the Netherlands 9 percent, Italy and Spain 8 percent each and the United States 7 percent.

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