MercoPress. South Atlantic News Agency
World Bank supports Argentina, favors institutional frame for 'holdouts'
“I welcome Argentina’s initiative in the UN and every way in which these problems can be solved”, said economist Augusto De la Torre World Bank Chief Economist for Latin America and the Caribbean Augusto De la Torre has said the ongoing conflict between Argentina and holdout creditors is due to the “lack of international debt regulation frames”, and favored Argentina's initiative in the UN to “solve the situation.”
“As there is no institutional frame to end the conflict, Argentina has to resort to its own creativity to try and find a solution to its financial impasse,” he told reporters on Tuesday.
De la Torre said the main problem of a lack of international regulation is that “it lets a minority of bondholders” reject debt restructuring: “This can cause you a big headache,” he said.
“I welcome Argentina’s initiative in the UN and every way in which these problems can be solved.”
The economist’s comments follow International Monetary Fund’s (IMF) support of a reform towards “orderly sovereign debt restructurings.”
On Monday the IMF said it engaged in a number of reforms designed to reduce the costs of sovereign debt restructurings for the benefit of debtors, creditors, and the system in general.
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Read all commentsWhat a numpty! There IS an institutional frame for ending the conflict. It's called a court of law. If the situation is that a minority of bondholders can reject a debt restructuring, where is the problem? Argieland went ahead and restructed anyway. So it doesn't block a debt restructuring, it's just a case of them saying that it's not for them. Do I dare mention bankers et al looking after themselves?
Oct 08th, 2014 - 08:30 am 0It's a classic case of the money makers taking care to look after their “cake.”
Oct 08th, 2014 - 08:46 am 0Argentina chose the bonds they issued and the law it was under in order to get the best rates. If the changes go through then serial deadbeats like Argentina will be able to raise funds but at a rate that fully reflects the change in risk caused by the change in terms.
Oct 08th, 2014 - 12:26 pm 0Rates will go up to reflect the lack of protection for lenders with the worst ranked debtors facing a disproportionately high rate. Argentina cannot make international investors lend it money on its terms when there are so many other places to invest.
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