Argentine crisis may change IMF's big-money rescues

WASHINGTON -- The violent protests that brought down Argentina's government last week may force the International Monetary Fund to re-examine its multibillion-dollar rescue packages.

The IMF and its major shareholder, the United States, are beginning to look at new options after loans and belt-tightening measures failed to revive South America's second-largest economy.

Policy-makers also are considering whether the Washington-based lending agency's warnings about the deteriorating situation in Argentina were strong enough.

Did it wait too long to call a halt to lending that clearly was not pulling the country out of a four-year recession and an 18 percent joblessness rate? What happens the next time a government goes bankrupt and can't pay its debts?

Allan H. Meltzer, chairman of an advisory panel that delivered a highly critical report on the IMF and its sister institution, the World Bank, said the crisis in Argentina should give the IMF a "greater sense of realism on what it can and cannot do."

He said the lending institution needs to do a better job of crisis prevention by getting governments "to make reforms up front and provide incentives to stay on course" so that bailouts become unnecessary.

The interim government of Adolfo Rodriguez Saa took office in Buenos Aires Sunday and promptly announced the suspension of payments on nearly $50 billion in debt, which is held by foreigners -- creating the biggest government default ever.