Friday, May 14th 2010 - 04:34 UTC

Mrs. Kirchner Promises to Refinance Provincial Government Debts

The Argentine government said it will refinance 89% of the debt that most of the country’s provinces hold with the federal government, announced President Cristina Fernandez de Kirchner and Economy Minister Amado Boudou.

Cristina’s generosity with debt ridden provinces

About 65.5 billion pesos (16.8 billion USD) of provincial debt will be eligible for the plan, which will extend maturities until 2030 at an annual interest rate of 6%, Minister Amado Boudou said. The proposal will cut provincial debts to the central government by 40% by 2015, anticipated President Cristina Fernández de Kirchner.

“In this way they will see their debt loads reduced and they will be able to put their resources to work on social assistance programs and on improving the productivity of the regional economies,” Boudou said at the presidential palace in Buenos Aires.

The refinancing will involve tapping a 9.8 billion peso fund and eliminating payments tied to inflation, Boudou said. Five of Argentina’s 24 provinces won’t take part in the plan because they aren’t indebted to the federal government, Boudou said.

According to Buenos Aires analysts, provincial financing needs will jump to 26 billion pesos in 2010 from 18.5 billion pesos last year. Local governments’ deficits will swell to 12 billion pesos this year, equal to 0.8% of GDP, from 9 billion pesos in 2009. Political analysts argue that the initiative will help boost former president Néstor Kirchner’s standing in the provinces and his 2011 presidential ambition.

Published in: Economy, Politics, Argentina.
Tags: Amado Boudou, Argentina, Cristina Fernandez, debt, economy, politics.

3 comments Feed

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1 Rufus (#) May 14th, 2010 - 08:46 am Report abuse
I can't help but think that the last sentence of the story is the key to the whole business, or is that just me being unduly cynical?
2 Bubba (#) May 15th, 2010 - 09:06 am Report abuse
Go figure, robbing Peter to pay Paul, and buy some votes.. and no Rufus, you are not being unduly cynical..
3 Argie (#) May 17th, 2010 - 04:00 pm Report abuse
In the first place, most of the provincial indebtedness owes its origin to two causes: i) imbalanced provincial spending, and ii) central Government cheating with 'coparticipation' funds (funds originated in national VAT and other general tax sources) by retaining and not paying the provinces their shares. On the other hand, the K Government has been using the delivery of these funds as a kind of ransom held to 'buy' Governors into supporting the K policies to stay in power. As Bubba well said “Go figure...”

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