IMF may help bail out Argentina

BUENOS AIRES, Argentina (CNN) -- The International Monetary Fund, in a letter to Argentina's interim president, said it is open to cooperation with the government to find a solution to the nation's economic crisis, the presidential palace said Thursday.

The IMF has refused to release a $1.3 billion loan payment, saying the country has failed to balance its budget despite the plan. It said Argentina would have to impose an austerity plan before the payment would be released.

A spokesman for interim President Adolfo Rodriguez Saa said the president hopes the IMF would not impose any conditions on further negotiations.

In the letter, IMF chief Horst Koehler expressed sorrow for recent events, a reference to protests and looting last week in which more than 25 people died.

Rodriguez Saa was appointed interim president Sunday by a joint session of Congress. He replaced Senate leader Ramon Puerta, who served as interim president briefly after the collapse of the government of Fernando de la Rua. New elections are scheduled for March 3.

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De la Rua was forced out after the protests and the refusal of the opposition Peronist party refused to form a coalition government.

The protests were sparked by the worsening economic crisis that sent unemployment close to 20 percent and put the country on the brink of defaulting on its $132 billion debt.

Rodriguez Saa's first action as interim president was to declare a moratorium on the debt.

The Argentine government implemented stark austerity measures in recent months, but not stark enough to satisfy the IMF.

If Argentina were to default on the debt, it would be largest default of any debtor nation, according to Fitch, the international financial rating agency.

The nation's four-year recession also is expected to lead it to devalue the peso by ending its decade-old pegging to the U.S. dollar.

It has already introduced a new currency, the Argentino, which is to start circulating in January alongside the peso and the U.S. dollar.