Argentina is ready to cancel next Friday a bond issue which was handed out to residents with bank deposits victims of the so called “corralito” (paddock) in 2002 when the collapse of the Argentine economy and financial system.
The Boden 2012 issue will pay out 2.281 billion dollars supposedly to those holders of the paper distributed ten years ago and which according to President Cristina Fernandez will show Argentine honours its debts and at the same time will make “Argentine more free and less dependent”.
“Just four days” said Economy minister Hernan Lorenzino in his twitter where he has the countdown to Friday, August 2 under the code word “economic-independence”. A similar countdown can be read at the Ministry of Economy web site with the days, hours, minutes and seconds left to repay the bond issue.
From his twitter Lorenzino that likes to quote the former president Nestor Kirchner (2003/2007) who in 2006 declared the “independence” of Argentina from the dictates of the International Monetary Fund when he cancelled all debts with the multilateral organization, in an only payment of 9.5 billion dollars, again recalled such decision.
“Under the IMF program it would not have been possible to nationalize the pension funds system, to implement the universal family allowance for each child and the reform of the Central bank charter”.
The big difference now is that Argentina is “returning the ‘corralito’ funds” and at the same time lowers unemployment and children mortality.
In 2005 Argentina re-structured most of its 102bn dollars defaulted sovereign debt and in 2010 managed another swap to refinance pending remnants from 2001. However Argentina still faces in US courts demands from so called “vulture funds” that have never restructured hold-out bonds and demand full payment. The pending face value of the bonds is over 3.5 billion dollars.
Argentina also has a pending debt of 6.75 billion dollars with the Paris Club which brings together 19 developed countries that issue ‘soft’ loans; the country has yet to reach an agreement.
But in 2010 Argentina created a fund “to get out of the red” for which central bank international reserves are committed for the payment of government debts such as the maturing bonds.
With this purpose in the last budget a contingency of 5.674 billion dollars was committed for those 2012 debts. A total of 44,804 billion Pesos mature this year (approx 9.8 billion dollars) and on Friday is one of the main disbursements with the Boden 2012. The other big payment is scheduled for December with 3.435 billion dollars with bonds that are linked to the Argentine economy’s GDP.