I’ll explain how Argentina avoided a new default

I'll explain how Argentina avoided a new default

The default for Argentina is included. Creditors accept the final offer from the Buenos Aires government. An unprecedented agreement. All the details in the deepening of Livio Zanotti

We speak of Argentina, but the case is paradigmatic of the information-political relationship.

Alberto Fernandez's government has avoided a new default to Argentina. It would have been the second in the past twenty years and would have further affected an economy in deep crisis even before the coronavirus pandemic, which made it even more nagging.

After 7 months in which – obviously it happened – the negotiations with the creditors jumped up and down like on a roller coaster, without however ever risking derailment, an agreement was reached.

This time, the debtor's strength was paradoxically in its undeniable insolvency and in the no less dramatic conditions in which many others find themselves: the risk (far from averted) of a default pandemic.

Argentina has undertaken to settle the debt by repaying 54.9 percent of the $ 69,000 million received from banks and private investment funds primarily in the United States in long-term installments. With a saving between capital and interests of 34/35 thousand million.

The agreement has not yet been signed by some minor creditors. And not always in these events, ubi maior, minor cessat. Although amid both internal and international criticism and controversy, President Macri paid almost the nominal value of the limited residue of the previous default, that of 2001, which ended up in the hands of speculators who managed to meet a benevolent judge. Today, however, the situation is quite different.

Sponsored by Nobel laureate Joseph Stiglitz, his former professor at Harvard, Economy Minister Martin Guzman slowly increased the initial offer by 40 percent, also partially giving up on grace times. And the Blackrock, Ashmore and Fidelity funds have finally accepted this unprecedented transaction. Convincing them were the pressures of the International Monetary Fund (IMF) favorable to the Argentine positions and the common fear that the lockdowns caused by Covid-19 could cause – precisely – chain failures of sovereign debt, before the financial system is in conditions of reorganize their availability. Argentina remains to be closed with its largest single creditor, the IMF, to which it owes 44,000 million. But it is a downward negotiation.

The sudden euphoria of the great Argentine news, newspapers and TV, which they headline with unprecedented optimism, compliments and smiles, is therefore quite understandable. Until yesterday, accused of irresponsibly leading the country to a financial catastrophe, as if it was he who had indebted him and not the previous Macri government, Minister Guzman is hailed in the front pages as a savior.

The accusations of neglect and even of inability for the apparent carelessness with which he managed the timing of the negotiation, are now reviewed, corrected and appreciated sub-species of tactical ability. As if beginners had sat on the opposite side of the table.

The seriousness of the economic situation is still ignored, the disruptive cause of which is in the bankruptcy of the neo-liberal model of President Maurizio Macri.

Livio Zanotti


This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/mondo/come-largentina-ha-evitato-un-nuovo-default/ on Thu, 06 Aug 2020 05:20:34 +0000.