Argentina has been told it can delay a $2.8bn (�1.8bn) loan repayment for one year.

The International Monetary Fund (IMF) agreed to defer the payment, due on 9 September, and said the situation in Argentina remained "very difficult".

It is the second time in three months that the loan has been extended.

The country is struggling with debt and a run on its banks ended with bank accounts being frozen.

IMF managing director Horst Koehler praised Argentina for greater stability and improved public finances in the second quarter of 2002.

But he said that political consensus was needed to pull the country out of recession.

Worrying decisions

Mr Koehler has already told Argentina it needs to adopt a number of policies before aid can restart.

These include an independent central bank, a solid plan to restructure the banking sector and the implementation of fiscal agreements between the central and provincial governments.

Mr Koehler said the IMF was concerned about several recent political decisions on banking and creditors' rights.

He said it was also worried about a recent supreme court decision that could overturn earlier spending cuts.