President Néstor Kirchner announced Thursday.
“We have made the institutional decisions that allow us to allocate our reserves to the repayment of our total debt” with the IMF, Kirchner said.
Argentina was scheduled to make payments to the IMF through 2008. Early repayment, by tapping into the country’s $27 billion (euro 23.5 billion) in foreign reserves, will save it $1 billion (euro 830 million) in interest.
Thursday’s announcement came two days after Brazil said it would pay back its $15 billion (euro 12.5 billion) IMF debt before the end of December, two years ahead of schedule – saving the country about $900 million (euro 750 million) in interest.
The announcement marked the Kirchner administration’s second a-chievement this year in paying down the country’s debt. In June, Argentina renegotiated $100 billion (euro 83 billion) in private debt with more than 70% of its creditors, reducing the amount it owed by 75%.
“As of Jan. 1, the work of all Argen-tines will no longer be dedicated to pay this debt,” Kirchner said. “Argentines’ work will be returning to Argentines.”
In Washington, IMF chief Rodrigo Rato said: “I welcome Argentina’s repayment of its outstanding obligations to the fund.”
“Important challenges and opportunities lie ahead for Argentina, and the fund looks forward to maintaining a productive relationship with the authorities,” Rato said.
“We remain ready to assist the Argentine authorities in any way that would help them address these challenges,” he added, without elaborating on what the challenges were.
In a speech announcing the repayment, Kirchner thanked presidents Luiz Inacio Lula da Silva of Brazil and Hugo Chávez of Venezuela for what he called their support of Argentina as it sought to emerge from crushing debt following an economic collapse in 2001.
Venezuela has purchased $950 million (euro 790 million) in Argentine bonds.
The Kirchner administration had sought for months to end its IMF debt to avoid conditions imposed by the international lender, such as maintaining a fiscal surplus and increasing public utility rates.
In 2004, Argentina suspended a three-year refinancing program to concentrate on renegotiating its private debt. But it continued to make monthly payments to the IMF, reducing the total owed by some $2 billion (euro 1.7 billion).
Stock markets had already closed Thursday when Kirchner made his announcement, but rumors of the repayment had circulated among traders, pushing Argentina’s selected shares index, or Merval, up 1.92%.