MercoPress. South Atlantic News Agency

Uruguayan debt “non payable”.

Uruguayan foreign debt is “non payable” and will need a considerable write off, indicated in Santiago Chilean economist Ricardo Ffrench-Davis working for the United Nations Economic Commission for Latinamerica, CEPAL.

In an interview with the Uruguayan weekly "Busqueda", said that those who voluntarily invested in Uruguayan bonds must assume they were wrong.

"Repaying 100% of the Uruguayan foreign debt is not viable, because the productivity of the country asserts is lesser than the interest rate agreed", explained the Chilean economist.

However Mr. Ffrench-Davis praised Argentine and Brazilian presidents for conditioning fiscal targets to growth and poverty reduction.

"Fiscal imbalances must be addressed but not attacking the neuralgic points of fairness and sustainable development".

Further on Mr. Ffrench-Davis criticized some rulers, although not mentioning names, fro been "more liberal than the IMF, which therefore means responsibilities for the recurrent financial crisis must be shares with the multilateral organizations".

"Growth with fairness" as proposed by some countries such as Argentina means giving priority to "production over financing", according to the CEPAL economist.

Mr. Ffrench-Davis believes in the existence of long term capital markets to ensure growth and fairness, "but the financial reforms of Latinamerica in the nineties concluded in a great crisis, a huge market for financial operations but insufficient funding for productive activities".

Following the collapse of the Argentine economy in 2001/2002, neighbouring Uruguay suffered a run on the banks that forced a bank holiday in August 2002. When the banks reopened four had gone down, foreign currency deposits in government managed banks were frozen and in May 2003 Uruguay negotiated a "voluntary" restructuring of its foreign debt with sovereign bond holders.