Rebels defy IMF on Argentina lifeline

THE International Monetary Fund is coming under heavy fire for throwing Argentina a £7.7bn lifeline.

The rescue package was agreed after pressure from the Americans. It could trigger extra funding for Argentina from the World Bank and others.

But opponents say the terms of the loan are not stringent enough and fear it could give the IMF a reputation as a soft touch.

In a highly unusual gesture of defiance, several major countries including Australia, the Netherlands and the Nordic nations voted against the deal.

One senior G7 monetary official said: 'There is a lot of unhappiness.'

The bailout is reminiscent of those provided at the time of the East Asia crisis in 1997-98 when the IMF was attacked for saving the skin of American banks and investors.

An effort was made to create a Chapter 11-style bankruptcy system for countries, but this has clearly failed and the IMF is back at square one.

The latest rescue means that Argentina will be able to refinance its official debt to the IMF itself and others.

But critically the package does nothing to address Buenos Aires' mountain of debt to the private sector. As a result there seems to be no relief for investors in Europe - including Britain - who were sold Argentine bonds which effectively are worthless.