MercoPress. South Atlantic News Agency

Barcena anticipates that Argentina will probably have negative growth in 2014

”Our (growth) projection isn't adequate. We made it in July and the situation today is completely different,” said Barcena

Argentina's economy probably will contract in 2014, the head of the United Nation's body for Latin America and the Caribbean, ECLAC said on Monday, as fallout from a new sovereign debt crisis will keep the country out of money markets.

 ECLAC, the UN's Economic Commission for Latin America and the Caribbean lowered its GDP growth forecast for Argentina to 0.2% on Monday from a previous 1.0%.

But the head of Santiago-based ECLAC Alicia Barcena admitted in an interview that the forecast was made before Argentina's latest debt standoff and was therefore out of date.

”Our (growth) projection isn't adequate. We made it in July and the situation today is completely different,“ she said in an interview. ”We believe that Argentina will probably have negative growth in 2014.“

Argentina missed a deadline last Wednesday to make a coupon payment on a restructured bond after failing to reach a deal with holdout creditors. A U.S. court had ruled Argentina could not pay bondholders who participated in prior exchanges unless it also paid holdouts at the same time.

Barcena said the decision to block the bond payment sets a ”bad precedent“ for what she calls the ”international financial architecture“ and underscores that it could affect future sovereign debt negotiations.

”You think there's going to be appetite to negotiate sovereign debt after this?“ she asked. ”We are very concerned that the relationship between creditors and debtors in debt-restructuring negotiations will be very unbalanced because of this decision.“

Barcena avoided calling Argentina's current debt situation a default, as did several credit rating agencies such as Standard & Poor's, which declared Argentina in selective default on Wednesday after it failed to reach an agreement with the holdouts.

”This is a very unprecedented situation ... that's why we are calling it litigation because it's a very anomalous situation. I say this with caution. It's difficult but that's why I say we're looking at an ongoing litigation.“

Argentina's latest debt crisis is in sharp contrast to the record 2002 default on 100 billion dollars in debt, when the economy collapsed around a broke government and millions of Argentines lost their jobs. This time the government is solvent.

Barcena said that this time around Argentina was better equipped to face the new debt crisis. ”Argentina is now on better footing than it was in its last debt crisis. It's in a better situation,” she said.