MercoPress. South Atlantic News Agency

Argentina insists with 75% debt reduction

Argentina insists with a 75% cut in its standing defaulted debt of approximately 88 billion US dollars.

Restructuring the burden of debt can't be solved by putting pressure on Argentina "given the serious mistakes committed in the nineties; we must start from a new debt level sustainable in time. In other words that is compatible with the community's capacity to repay", indicated Economy Minister Roberto Lavagna in a column published this Wednesday in one of Buenos Aires main dailies. Any reschedule of debt repayments must "allow for sustained and stable growth" in Argentina, which only last year began to emerge from a tremendous four-year downturn.

Writing in La Nacion, Mr. Lavagna insisted that private bondholders can only expect to receive 25% of the $88 billion debt.

Mr. Lavagna's article was seen as a reply John Taylor, number two in the US Treasury Department, John Taylor, who anticipated that the current three year accord with the International Monetary Fund could be conditioned if Argentina fails to reach an agreement with the country's private creditors.

Mr. Taylor also warned the Argentine government of the consequences of not honouring IMF and other multilateral organizations credits, which were left out of the country's default in December 2001.

Mr. Lavagna stressed that serious issues like debt renegotiation "require a clear head in order to understand both the changes that have been happening in the international context, as well as the political, social and economic realities of the country involved in a crucial restructuring process."