MercoPress. South Atlantic News Agency

August 3, an emblematic date for Argentina’s “dollar-clamp” policy

The date will recall and celebrate former President Nestor Kirchner’s “debt-reduction” policy

The current strict measures to counter the purchase of US dollars and by extension capital flight, implemented by Argentina apparently have a calendar date full of political significance: August 3 when the Boden 2012 fully matures.

Boden 2012 involves 2.2 billion dollars and dates back a decade in the midst of the default crisis when the President Eduardo Duhalde administration issued the bonds to help the country climb out from a melting economy which contracted 25% and soaring unemployment.

According to government sources Economy Minister Hernan Lorenzino on August 3 will be paying back the bonds “to the last cent in US dollars be it in Buenos Aires or wherever holders are. There will be no renewal or new issue”, and the money is already deposited in a special “Debt reduction fund” with Central bank funds.

The date will most probably be celebrated with a massive political rally, and until then the “dollar-clamp” and “to the last coin” will be collected to meet the calendar cancelling date.

Boden 2012 is an emblematic bond from the time of the “corralito” when foreign currency deposits in the banking system were frozen and partly converted into Argentine Pesos at a special exchange rate.

The Nestor and Cristina Kirchner governments inherited the bond from the Duhalde administration but religiously honoured its conditions. To cancel the Boden 2012 is expected to have a psychological impact in the local market, plus even more important for the Cristina administration a political boost.

President Cristina Fernandez announced it on March first when she opened this year’s Congress ordinary sessions stating that “this year the government will finish paying the Boden 2012, which was specifically created to pay Argentine depositors their savings monies which the banks did not return”.

She added, “a government must be in charge of all things: those for which it is responsible for having created them, and those from other administrations also, that is why it is the government and demands the support from the popular majorities”.

Thus the Cristina Fernandez will make the most politically of August 3 by cancelling the Boden 2012, a bond issued by the previous administration.

It is also expected according to independent market sources, that by then the Argentine government will have assured over half of its annual trade surplus of 12 billion dollars, a sum which is considered crucial to close the financial 2012 year with relief in a year which is proving to be particularly challenging at international level.

By mid year the Cristina Fernandez administration is expected to have a clear idea on the volume of fuel imports for the whole year. The first four months, in spite of a very mild autumn and winter have not been encouraging since according to INDEC (the stats office) fuels imports have reached 2.2bn which is 12% higher than in the same period a year ago. The Executive is hoping that the final bill will not surpass last year’s 10bn dollars probably with some help from increased production by the seized YPF.

Argentine government sources have anticipated that most probably a political rally headed by President Cristina Kirchner will be organized for August 3 taking advantage of the cancellation of the very costly Boden issues and recalling former president Nestor Kirchner’s ‘debt reduction’ policy.

The policy included paying back all loans pending with the IMF, which the Kirchner couple has targeted as the main villain of Argentina’s financial woes and deep indebtedness. It is estimated that during the ten years of the Kirchner couple the two administrations had to face capital and interest payments equivalent to 19.6 billion dollars.