Thursday, October 11, 2012
Tokyo (Special Report) – The negotiations with Argentina’s creditor countries after the 2001 default remain halted. The year 2012 will close without the government having brought a payment proposal to the Paris Club, over the differences that exist in the payment period for those obligations. It came out that the amount owed has already been agreed to earlier and that it comes to US$8.6 billion, which is really US$9 billion when US$400 million in additional interest and penalties is added over the payments not yet made. This icon of the default is now 11 years old and now with the scarcity of cash its settlement becomes even harder.
Official sources say that next year between US$12 billion and US$13 billion will be obtained from the trade balance, at a time when the need for financing will come to around US$4 billion.
“It’s less than one point of GDP for the country,” said officials, and “it should be the envy of any European country,” they added. That amount doesn’t include the potential GDP coupon payment, which the government always takes as a possibility, while in the financial arena it’s read more as a formality, since for that to happen GDP will have to grow more than 3.26% this year, something highly unlikely. There could be a certain margin to push an agreement in comfortable installments for the Paris Club, but in an election year, to set those resources aside – which in fact could also be scarce, no one knows – it beyond fiction. But behind this accumulation of interest in Paris, other interests in Washington are in motion. It’s the pressures that are growing from European representatives before the international organizations, with or without the Repsol effect.
There have already been attempts to block disbursements from the IADB and the World Bank for Argentina, but until now they’ve never managed to get a majority of votes. Leading the strong support for the country is Brazil, whose Finance Minister Guido Mantega has already crossed paths with Finance Secretary Adrián Cosentino, on the way to this annual meeting of the IMF. One should also recall that on the board of this organization, at the time the INDEC case was brought up, the Europeans joined the United States in a position that is already considered to be a permanent opposition to all assistance going to Argentina from the organizations.
In this last case, it was inflamed by the non-payment of cases from the ICSID, the World Bank tribunal on disputes related to foreign investments in countries. Despite the existing tension in this field, Argentina doesn’t plan to follow the path of Venezuela and walk away from its settlements (for more that the rulings already decided remain in course and that only has an effect on future litigation). Brazil, in fact, never adhered to this World Bank tribunal. Still, Argentina has shown no sign of leaving the ICSID, less when that decision wouldn’t change anything about the claims made after the 2001 crisis.