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After the Announcement Of The Write-Off Of The Paris Club Debt; The bondholders fear that the payment of the debt may only exist to avoid another default
CriticaDigital
September 04, 2008

Pablo Corso

Robert Raben, director of ATFA, told Cr ticadigital that "it still remains to be seen whether the President really wants to fix this country's economy." He recommended "dealing" with the INDEC, inflation and the bondholders in order to achieve access to international markets.

In an exclusive interview with Cr ticadigital, Robert Raben, from ATFA, said that until the country resolves its problems "it will continue having to raise funding domestically and with Venezuela".

The US bondholders reacted to the Paris Club payoff with equal doses of hope and caution. In an exclusive conversation with Criticadigital, Robert Raben, executive director of ATFA admitted that although the presidential decision "is a step in the right direction", he is hoping for more solid signs from the Casa Rosada.

The organization run by Raben formally Assistant Attorney General in the Clinton Administration - recalls in its website that "towards the end of 2001, the Argentine government began what was to be the default on the most important sovereign debt repayment ever recorded", with which Argentina "has provoked far-reaching changes in the global bond markets, infringed international financial rules and violated the laws of the United States."

ATFA did not stand still in the face of this outlook. After former president Nestor Kirchner's government paid off the debt to the IMF in 2005, the Task Force presented an appeal before the US justice whose argument may be summed up in the following way: "If Argentina paid off the Fund, why can't it pay off its creditors?"

The announcement to write off the debt with the Paris Club seems to strengthen ATFA's stance, although Raben is cautious. He said to Cr ticadigital that:

CD: How did you take the news of the total repayment of the debt with the Paris Club?
RR : At ATFA we feel encouraged by Argentina's decision to honor its debt with the Paris Club. Although this is a step in the right direction, there are still major obstacles in the way of the country's economy being considered on a par with that of other leading Latin American countries, such as Brazil, Chile and Mexico.

CD: Do you consider that this opens the doors to external financing?
RR: Until Argentina tackles its problems with inflation, INDEC and the bondholders, it will still not be able to access international capital markets.

CD: Local and international reactions were positive
RR:- This was an important step, but there are still challenges ahead. Argentina can only access these markets once it has dealt with INDEC, inflation and the bondholders. Until then it will be obliged to seek funding at a domestic level and from Venezuela.

CD: Are the payments to the IMF and the Paris Club a preamble to the reopening of the debt swap?
RR: We hope that president Kirchner will listen to the recommendations from those who are asking for the debt swap to be reopened. The payment to the Paris Club would be a welcome break from its previous policies, but it remains to be seen whether the President really wants to fix this country's economy or if she is just trying to avoid the next default.

CD: What are the next steps?
RR: ATFA is continuing to work with Congress and the State Department and Treasury of the United States so that Argentina can return to the negotiating table. The offer to pay off the Paris Club was just the first step.