Friday, August 16th 2013 - 03:37 UTC

Argentina will pay bonds maturing in September with Central bank reserves

Argentina's central bank approved on Thursday the use of 2.5 billion dollars to pay public debt through the rest of 2013, a move that will further diminish reserves already stretched by heavy state spending ahead of the October midterm election.

According to the Central bank Argentine sovereign debt has dropped to 13% of GDP

Most of the funds, 2.2bn dollars will be used to cancel the Bonar bond which matures next September.

In a brief release explaining the latest operation, the Central bank said that since the implementation of the debt-lowering policy, ‘sovereign debt in the hands of private holders has dropped from 105% of GDP in 2003 to 13% in 2013”.

Argentina has been cut off from the international bond market since its catastrophic 2002 sovereign default and manages to operate with a trade surplus mostly from soy and corn exports.

But public spending has outpaced revenue as the Oct. 27 congressional election approaches.

Central bank reserves at the beginning of the week were about 37 billion, down from 45 billion a year ago.


22 comments Feed

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1 toxictaxitrader2 (#) Aug 16th, 2013 - 03:43 am Report abuse
Argentine version of Q easing?
Good or bad?
Please discuss!
2 Anglotino (#) Aug 16th, 2013 - 04:51 am Report abuse
I have trouble believing the 13% when I don't trust INDEC's statistics that tell us how much growth and inflation is.

Argentina's GDP is overstated and so its debt as a percentage of GDP is understated.
3 agent999 (#) Aug 16th, 2013 - 07:16 am Report abuse
Have they included the debt to the Paris Club ?
Cristina did promise payment of this debt in 2008!
4 Optimus_Princeps (#) Aug 16th, 2013 - 07:19 am Report abuse
It's easy to pay debt when the money isn't yours.
5 yankeeboy (#) Aug 16th, 2013 - 07:25 am Report abuse
2. When you tell a lie you'd might as well make it as favorable to your side as possible.

GDP has been overstated for 7 years and Arg doesn't recognise most of the debt they owe. It is hard to say what the % of debt/gdp is in reality
Whatever the real number is is waaaaay more than they have in reserves and all of it is past due!

I think we should bring back gunboat diplomacy and collect.
6 Klingon (#) Aug 16th, 2013 - 09:31 am Report abuse
@5 Correct it is easy to lower the debt owed to creditors when you force an agreement to pay them 10 cents on every dollar.
7 ChrisR (#) Aug 16th, 2013 - 11:04 am Report abuse
5 yankeeboy

I would LOVE to see an American warship in the Plate off BsAs.

But WHAT would they collect? This bunch are replacing USD with argie scrip in the CB!

I suppose you could have it for toilet paper but that would be as valuable as it gets.

Simon68, some weeks ago pointed out the fact that the Dollars held by the CB was under 6 Bn (I think it was) and nothing much has come into the coffers since then. Unless something drastic happens to give them a massive inflow of dollars then it's all over by the end of the year.

Doesn't that fit in with what we both think anyway?
8 Captain Poppy (#) Aug 16th, 2013 - 11:54 am Report abuse
US battle groups never cruise alone, they move with their assigned carrier. The reality is an American battle group could never make it into the Rio de la Plata with the typical carrier drawing over 35ft of water.
Secondly even if we did resort to gunship diplomacy, we are certainly no going to use our military as debt collectors and especially for someone of the likes of Singer. I do believe that Argentina owes this money only because the laws have not changed and until they stands as a legal debt. That being said, the concept of picking around the trash looking for a Filet Mignon steak needs to be changed. When you can buy a depleted nations debt that is bankrupt (except it does not exist for countries) for less than pennies and expect to collect the entire amount and exploit it in the courts.....yes, there needs. to be a type of bankruptcy protection for countries as well as the individuals. Paul Singer is an example of everything that is wrong with capitalism and clearly exemplifies perfect greed. He is the real, live Gordon Gecko. He exploits everything and anything to make a penny. Some call him a Vulture.......I prefer scumbag or grave robber. I can see him having rings removed from the dead.
But to repeat for the trolls, until the law is changed, he has every right to be the scumbag he is and pick the this case Argentina.
9 owl61 (#) Aug 16th, 2013 - 12:05 pm Report abuse
Are the central bank reserves, now allegedly reduced to 37B from 45B a year ago, used to pay the pensions of retirees inasmuch as that pension fund acct and obligation was taken over the AR government a couple years ago?
10 geoff nolan (#) Aug 16th, 2013 - 06:12 pm Report abuse
#1 toxictaxitrader,

You ask an interesting question about QE a la Argentina. To my mind they are similar insofar as they are both ill advised ad hoc expediency that doesn't do a thing to restructure core thinking and policy to foster real enlightened growth. in QE Fed style interest rates are kept at close to 0% so that the Government may finance its deficit by purchasing Treasury certificates to the tune of 85 billion dollars a month from itself. The idea is that if interest rates are zilch then once growth kicks in there will be little cost to the interest on said debt. The problem is that doubling the entire national debt dating from the founding of the republic gave birth to a mouse. It is the revolution in the North American energy sector that is the tide that will lift all boats thus enabling everyone to breathe a sigh of relief that the crisis is over and the problem solved; more ludicrous kicking the can down the road.

CFK is equally delusional but in a different way. Interest rates are not at 0%. Cash is king and inflation is a monster. Whaddaya think?
11 Brasileiro (#) Aug 17th, 2013 - 12:26 pm Report abuse
English like that anthem. Beautiful
12 novato1953 (#) Aug 18th, 2013 - 09:17 am Report abuse
I knew very little about Argentina until last winter, when I began thinking of it as a vacation destination. It has been an interesting education since, albeit acquired entirely offshore. What took me a long time to grasp is that Argentina is not using a neo-liberal capitalist model as the template for its economy. As a nation, through thick and thin for a century, it has not much cared about those neo-liberal standard measures of success. For an immigrant nation, Argentina has a surprising depth of nationalist feeling and it has time and again been willing to pay money and sometimes a little blood to satisfy its pride. They often look like losers to us when in fact they are scoring a completely different strategic game. However, the artful dodging now underway in its currency market will almost certainly tip into the abyss of massive devaluation. My gut tells me about 18-22 ARS-USD is coming. This may even happen in time for my vacation, depending on how the harvests turn out. Hola!
13 toxictaxitrader2 (#) Aug 18th, 2013 - 08:53 pm Report abuse
#10 geoff nolan
Yes geoff both the fed (an institution every bit as corrupt as the Argentine government) and the a fore mentioned are using smoke and mirrors to deceive but we know one day soon the curtain will pulled away(ala The wizard of Oz)
Interesting name Nolan, are your people from the old country?
14 The Truth PaTroll (#) Aug 19th, 2013 - 01:27 am Report abuse
Prisencolinensinainciusol, ol raydt?
15 Welsh Wizard (#) Aug 19th, 2013 - 07:45 am Report abuse
Interesting to hear the CFK was talking about getting more loans from the WDB and IMF this year. I was under the impression that a number of countries had started blocking those loans. Has the message not got through?
16 The Truth PaTroll (#) Aug 19th, 2013 - 09:44 am Report abuse
Wrong. Argentina will never use the IMF again. Obviously you don't understand Spanish.

Dor mowl k. Prisencolinensinainciusol, ol raydt? taysion.
17 Welsh Wizard (#) Aug 19th, 2013 - 10:31 am Report abuse
As an arm of the IMF or affiliated organisation, not direct “bail out loan” a la PIGS
18 geoff nolan (#) Aug 19th, 2013 - 10:43 am Report abuse
toxictaxitrader #13

We don't know exactly who are our forbears in the old country are except to say that they could have been sheep stealers in Carlow.
19 yankeeboy (#) Aug 19th, 2013 - 11:31 am Report abuse
16. Never is a very long time. As soon as the Ks destroy what little remains of the economy and the BCRA funds are completely gone they'll have no choice but to ask the IMF for U$.
20 The Truth PaTroll (#) Aug 19th, 2013 - 11:50 am Report abuse
No argentine politician would survive a day asking for money to the IMF. End of story.
21 yankeeboy (#) Aug 19th, 2013 - 12:37 pm Report abuse
The freezing citizens of Buenos Aires may insist on an IMF loan.
2014 is setting up to be even more difficult than 2013 was for balance of payments.
If the grains don't recover there is no way Arg will be able to buy fuel next year.
22 ChrisR (#) Aug 19th, 2013 - 12:43 pm Report abuse
WTF should The Dark Country get a loan off the IMF FFS?

Perhaps TMBOA will demand one at the UN, pleading the Falklanders have taken all her money?
23 geoff nolan (#) Aug 19th, 2013 - 04:11 pm Report abuse
The IMF would likely be reluctant to make any such commitment. In the past Argentine officials have taken financial assistance only to later renounce their obligations and refer to those who extended loans and credits as “vultures”. If however the mayor of Tigre, Mr. Massa were to assume the mantle of office subsequent to elections which repudiated and swept the party of K from power...well that might induce the IMF to make every effort to help in the transition.

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