Ambito Financiero

Wednesday, September 12, 2012

Yesterday in the French capital there was a conclave among bankers, bondholders and representatives of the Paris Club, which was also attended by officials of the IMF and the World Bank, where they analyzed debt restructurings.  The Argentina case was not absent and according to one of the organizers of the meeting, the Institute of International Finance (IIF), “the creditors exchanged views about the status of the restructuring of Argentina’s foreign debt and in particular the treatment of the ‘holdouts’ (bondholders that didn’t enter the debt swap).  The sense of the discussion was that, after focusing on restructuring its debt, Argentina has not been able to return to accessing the international capital markets,” according to an official statement from the IIF.

Today, at the headquarters of the French Ministry of Economy and Finance, they will resume looking at the renegotiation between the Paris Club and Argentina.  For that they convened not only academics like Anna Gelpern and Mitu Gulati, from American and Duke universities respectively, but also the inevitable Nicola Stock, head of Task Force Argentina, and Hans Humes, of Greylock Capital, both from the side of the bondholders.

In yesterday’s meeting there was also a discussion “about the methodology of setting a value for the contingent balances that defined the importance of a correct evaluation of these amounts because they could have a strong impact on the sustainability of public debt, above all during the financial crisis.”  The international creditors also discussed the more recent restructurings of the Paris Club, among them Guinea and St. Kitts and Nevis, and with emphasis on the issue of comparing the treatment of Ivory Coast.

A presentation from the IMF explained the current process of modernization and clarification of the framework of fiscal policy and the analysis of the sustainability of public debt by the organization.  “The recent global crisis has put into relief the need for greater attention to the sustainability of public debt of countries with access to the market.”

The creditors also exchanged views about the forms and methods of strengthening the framework for preventing sovereign debt crises and resolving them, in the context of applying the “principles for stable capital flows” and the fair restructuring of debt.  The participants stressed the importance of a close dialogue between the private and public sector, especially in times of economic difficulties.  They emphasized the usefulness of the principles for the stability of capital developed under the aegis of the main borrowers among emerging markets and the private creditors: transparency, dialogue, negotiating in good faith and equal treatment of creditors.

According to what Cristina de Kirchner put forth to Minister Hernan Lorenzino, the goal was to get an agreement with the Paris Club before the end of the year.  The negotiation remains frozen over the period of payment and whether the IMF will participate in the agreement.  The debt is more than US$9 billion, including interest.