Argentina has taken a crucial step towards securing further help for its troubled economy by accepting an outline proposal from the International Monetary Fund (IMF).

The IMF board will on 23 January consider a letter of intent from Buenos Aires, and decide whether to grant aid to the country after a year of negotiations.

Argentina is experiencing its worst economic crisis in decades and is in default on loans with most major international donors.

Half the country's population is living in poverty and children have begun starving to death in the north of the country.

Intentions clear

Argentina does not want to commit itself over whether it will or won't pay (the IMF) Armando Torres, economy ministry spokesman

The letter of intent, drawn up by visiting IMF officials, was approved by Argentina's government, economy ministry spokesman Armando Torres said.

Reports suggest the agreement will allow Argentina to extend the deadlines for its $6.6bn (�4bn) in payments due to the IMF by up to three years.

It is also expected that the package would allow Argentina's incoming government - due to be elected in April - at least three months to implement key economic reforms.

Mr Torres gave no details of the content of the letter but said it was being sent to the IMF headquarters in Washington.

Correspondents said it was not clear whether Argentina would meet a debt payment of $1bn (�625m) which it is due to pay the IMF later this week.

Further default?

"Argentina does not want to commit itself over whether it will or won't pay," Mr Torres said.

"Argentina will address the situation when there is no doubt about the deal," he added, saying that the IMF was due to inform Argentina of its chances for aid towards the end of the week.

Argentina has already defaulted on World Bank debt and a $680m payment is due to the Inter-American Development Bank on Wednesday.

President Eduardo Duhalde's government has repeatedly refused to use reserves to pay its debt dues unless it has concrete guarantees that it will be granted aid.

Conditions

The IMF's programme is likely to contain a number of conditions and the fund could negotiate a more comprehensive programme following the presidential elections on April 27.

Any deal would be the first between Argentina and the IMF since August 2001, when the IMF cut off billions of dollars in funding.

The fund has long called for new measures to stabilise the country's banking system, to keep inflation under control and to end political quarrels.