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Economy Ministry says paying debt will be an 'easy task'
Ambito Financiero
July 03, 2008

According to Finance Secretary Hernan Lorenzino, to comply with debt payments that Argentina has pending through the end of the year "will be an easy task." In his first appearance in public, he explained that he has already written off the markets: the government has no plans to emit debt on the international market and neither on the local market until the end of the year.

This absence from the markets is not, however, voluntary. It so happens that the drop in bonds and the rise in country-risk have raised the interest rates on new bonds to unsupportable levels. For this, the strategy for the coming months will be to run back to the fiscal surplus and to the surpluses in decentralized organizations like the AFIP, ANSeS or the National Lottery. In reality, it is increasing what has been done over the past two years. According to Lorenzino, this independence from resources on the capital markets is possible due to the "robustness of the Argentine economy."

The official, who was named by Economy Minister Carlos Fernandez, did not refer to the negotiations with the Paris Club, one of the pending issues for the government. The debt with this organization is in default, and despite pressure from the principal creditor nations the negotiation has not advanced at all.

There is no plan B here, nor C, but simply compliance with the finance program for the rest of the year, which is an easy task when you think of the robustness that the economy is showing thanks to its fiscal solvency", the official said during a seminar organized yesterday by the National Stock Commission at the Buenos Aires exchange.

Guarantee

The finance secretary guaranteed the compliance with the financial obligations set for this year, that in the second half means interest coming due for a total of US$3.6 billion, according to the program released by the Palacio de Hacienda.

We have already identified the sources of financing for the rest of the year, so it's far from being a problem," Lorenzino said, soon after adding that "we're already at work on the medium term."

In that sense, he added that "we don't see any big problem in completing the program, and our work is focused on the medium term, and in this sense we hope that the market conditions we are found to be more receptive than at present."

On the challenges in his area, Lorenzino recognized that "there is a great need to find market mechanisms to finance infrastructure projects, which will be an issue that I will put a lot of energy into."

On the other hand, he raised the importance of moving ahead with the creation of the Bank of the South, whose main partners will be Argentina, Brazil and Venezuela, with seed capital of US$2 billion each year. "While (the Bank of the South) is still an embryonic actor in this story, I have confidence in how it can end up being a (finance) instrument of interest for the countries of the region" he concluded.