MercoPress. South Atlantic News Agency

In nine years of “Kirchner era” Argentina honoured 32 billion dollars in debts

Banker Marco del Pont, “it’s better to be indebted with the central bank than with foreign creditors”

Argentina’s Central bank confirmed that during the “Kirchner era” the country paid 32 billion dollars in pending debts, “the centre piece of the policy to recover sovereignty by cutting indebtedness” and praised the decision to appeal to the bank’s international reserves to support such a policy.

“The policy to use central bank reserves to pay for sovereign debts has not affected the central bank’s reserves position, and we have paid 32 billion dollars to multilateral organizations and private creditors since May 2003”, said central bank president Mercedes Marco del Pont during a conference at the University of Buenos Aires School of Economics.

Despite these payments the central bank has had sufficient capacity and resources “to enforce an efficient monetary policy” and the exposure of the Central bank in bonds and other issues is “very manageable and well below the level of many other countries in the world”.

“Argentina honours its debts and recovers sovereignty through an efficient policy of cutting indebtedness”, underlined the banker to the conference.

Marco del Pont also addressed criticisms in Argentina that the country is paying debts overseas but is becoming heavily indebted with the central bank.

“It is true, but it is far healthier to be indebted with the central bank”, admitted the central banker who added that the recent reform of the bank’s charter opened the possibility of assisting the national Treasury with international reserves.

“The hegemonic thinking in the last three decades of recent history in Argentina ended the genesis and the reason of existence of central banks which must be helping finance governments and the public sector and orient credit based on the strategic needs of the country”, she underlined.

Marco del Pont supported the current policy of restricting foreign currency trade arguing that in the last nine years (Kirchner era) “a framework of conditions was created that eliminated historic and structural problems: restrictions from the outside economy”.

“Argentina has a positive trade surplus, ample international reserves but it can’t guarantee (in the current global situation) the accumulation of external assets (capital outflow) and foreign currency in sufficient volume for the economy to function normally, thus the restrictions in the purchase of dollars”, said Marco del Pont who claimed that the outflow of dollars many times were encouraged by certain economic interests which were spearing a devaluation of the Argentine peso.

But the central bank’s obligation is “to oversee the movements of the financial influxes and that’s where the strategic decision to regulate the currency exchange market comes from” she explained.

In a more political vein Marco del Pont warned that “the world is falling apart and no one can escape it” although people must “move faster and come up with the right predictions in order to minimize the effects of the crisis.”

“It is impossible for the economic recipes that created this crisis to now pull us out of it. And that what is happening, and this crisis is deepening,” she warned.

Argentina’s strategy before the world crisis and its main strength has been “less dependency from international markets, a more balanced and diversified production structure and as I said before cutting indebtedness”.

The government of President Cristina Fernandez has not remained idle and one of the crucial tools to face the challenge “as I mentioned before was reforming the central bank’s charter which gave us the sufficient freedom to implement economic policy”.