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Argentina needs to reach an agreement with holdouts, insists Prat-Gay

Thursday, January 14th 2016 - 06:54 UTC
Full article 32 comments
Finance Minister Alfonso Prat-Gay said the negotiations would be tough but it was in Argentina's interests to reach a deal. Finance Minister Alfonso Prat-Gay said the negotiations would be tough but it was in Argentina's interests to reach a deal.
Cristina Fernandez government's failure to agree with creditor claims in New York have risen the debt to $9.9 billion from $2.943 billion originally. Cristina Fernandez government's failure to agree with creditor claims in New York have risen the debt to $9.9 billion from $2.943 billion originally.
“We're not going to ignore the issue. It's not our mess but we have no problem in cleaning it up,” Prat-Gay told a news conference. “We're not going to ignore the issue. It's not our mess but we have no problem in cleaning it up,” Prat-Gay told a news conference.
Finance Secretary Luis Caputo met for the first time with the funds in New York office of the U.S. court-appointed mediator Daniel Pollack for preliminary talks. Finance Secretary Luis Caputo met for the first time with the funds in New York office of the U.S. court-appointed mediator Daniel Pollack for preliminary talks.

Argentina's new finance minister said on Wednesday it was imperative to resolve the country's legal dispute with U.S. creditors over unpaid debt because financing of the country's fiscal deficit this year may depend on progress on the issue.

 Solving the more than decade-long debt battle would enable Argentina to return to global credit markets and stop financing the deficit with the printing presses, a tactic which helped fuel double digit inflation under the previous government.

Finance Minister Alfonso Prat-Gay said the negotiations would be tough but it was in Argentina's interests to reach a deal. The previous government's failure to do so had cost the economy, he said, with creditor claims in New York having risen to $9.9 billion from $2.943 billion originally.

“We're not going to ignore the issue. It's not our mess but we have no problem in cleaning it up,” Prat-Gay told a news conference.

Former President Cristina Fernandez had refused to settle with the funds that bought Argentine bonds on the cheap after its massive 2002 default and then held out for better terms when Argentina restructured its debt. They are broadly known in Argentina as “vultures” for picking on the carcass of the economy after the default plunged millions of Argentines into poverty.

Finance Secretary Luis Caputo met with for the first time with the funds on Wednesday in the New York office of the U.S. court-appointed mediator Daniel Pollack for preliminary talks.

In addition to the debt battle, Argentina's new center-right government, which took office in December, also inherited a primary fiscal deficit of 5.8% of GDP in 2015, Prat-Gay said.

“The primary fiscal deficit is at its highest in 30 years,” he said. Cristina Fernandez's two terms were characterized by heavy government spending that aimed to boost the domestic economy.

The new government aims to reduce this deficit to 4.8% of GDP this year and 3.3% in 2017, in part by eliminating subsidies for public services for the 30-40% of wealthiest Argentines, Prat-Gay said. Subsidies would be maintained for those who needed them, he added.

The new government aims to bring down inflation to between 20 and 25% this year from 28% in 2015. By the end of Macri's term, in 2019, inflation should be around 5.0%, the minister said.

Top Comments

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  • golfcronie

    Eliminate all the subsidies from the last government ministers and hangers on specially TMBOA and family.

    Jan 14th, 2016 - 10:23 am 0
  • commonsense

    Finally, an Argentinian who seems to understand the basic world economic rule... If you don't pay your debts we wont lend you any more money> SIMPLE.
    Maybe he could spend sometime explaining to the average Argentinian how TMBOA, Tinman and Klickoff have been lying for all these years and at the same time filling their pockets for their retirements in Europe.

    Jan 14th, 2016 - 11:27 am 0
  • Conqueror

    Easy enough. About US$10 billion, I reckon. However, there may be another feature. The bill went up went the Honourable Justice Griesa admitted the “me too” claimants. The question is; what are the “me too” claimants claiming for? Do these claims cover the many legal judgments against argieland over the years? Will there be more “claims” as lawyers around the world dust off old documents? How much has argieland refused to pay since the Kirchners lied their way into power?

    Who knows how many judgments remain unresolved? How much money is involved?

    Jan 14th, 2016 - 12:45 pm 0
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