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Argentina appoints team for talks with creditors to renegotiate massive sovereign debt
Argentina appointed a government team to kick off talks with creditors to renegotiate about US$100 billion in sovereign debt as the new center-left administration of President Alberto Fernandez postponed payments on some of its short-term debt. Read full article
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Disclaimer & comment rulesPrivate lenders first, and then the IMF, liberally handed out enormous sums to the government of former president Mauricio Macri. Attracted by high interest rates, private investors injected millions in 2016 and 2017.
Dec 22nd, 2019 - 04:30 am - Link - Report abuse -2When private lenders became spooked early 2018, the IMF took the torch and granted Macri the largest single loan of its history -- one that made up over 60 per cent of its total lending portfolio. Gossip had it that president Donald Trump, anxious to help his Argentine counterpart, gave the go-ahead for a loan that was granted in record time and without the usual technical reports and IMF staff recommendations. One can choose or not to believe such a bold claim.
Fast forward to December 2019. Alberto Fernandez has declared willingness to pay the monstrous foreign debt -- after all, the government that contracted such debt was elected democratically -- however, he'll ask for a reasonable time to make such payments.
Which makes sense. The Macri government borrowed a lot of money with tight maturity dates, many coming due in the next two to four years.
Lenders, private and public (IMF) will now need to assume their part of the responsibility in lending money to an inefficient government -- a government not many wanted to lend a cent in Jan. 2018 but was rescued by the IMF to ensure foreign debt payback as well as the continuity of a president with a soft spot for foreign speculators.
As Nestor Kirchner once said, “dead debtors don’t pay.”
It is incredible that Argentina could find people to lend money to it. How many idiots are there in this world?
Dec 22nd, 2019 - 05:41 am - Link - Report abuse 0A fool and his money is soon parted.
The EU lent the Greeks a huge amount of money, mainly so they didn’t default on the loans they had with EU banks and knock the whole system over.
Dec 22nd, 2019 - 05:30 pm - Link - Report abuse 0And still Greece has one of the lowest tax burdens per head in the EU.
The only way they could levy a tax and know everyone had paid it, was to put it on the electricity meters, virtually everyone had one of those.
Most if not all of Argentina’s debt now will have a clause to say if a certain percentage of shareholders agree, a reduced amount can be re-paid (a “haircut”) and selling on rights are restricted.
It can’t be bought up for cents on the dollar after a default and then later on full repayment demanded, as happened last time.
EM
We have death duties, you pay tax for dying.
Hey, it's much simpler than that.
Dec 23rd, 2019 - 06:22 am - Link - Report abuse -2Argentina, Alberto Fernandez said, will pay its foreign debt. Only, that can't happen at the cost of starving Argentine citizens and choking the economy into recession.
First of all, Argentina needs to solve the most urgent needs of the poorest, then re-start the economy to make possible to start growth again. Then, repayment can begin. The negotiating team will try to come up with a reasonable, realistic agreement and the creditors including the IMF should recognize their own responsibility in lending money to an irresponsible government and do their part to ensure success.
Finally, Argentina got rid of the highway robbers' gang and voted in a real government team.
The new law passed (clearly unconstitucional) in one day (if, you have correctly read, passed in a single day) involves taxes to the Argentine Middle Class, export taxes, unconstitutional freezing of the incomes to retirees (in a country with 50% inflation) y cancellation of taxes to financial income. Clearly, the weight of the adjustment will fall in the most unprotected middle class sectors and the productive sectors of the country.
Dec 23rd, 2019 - 02:09 pm - Link - Report abuse +1This will allow the Government to show itself as a “disciplined student” to the IMF with the intention of additional credits and financing. Not bad, but this shows the true nature of Peronism when it is in power (J.D. Peron, C. Menem, N. Kirchner, all of them ruled the country with “super-powers”).
The IMF will surely object to the lack of reduction in public spending (this tax increase will allow to collect between 1/2% of GDP covering the current fiscal deficit of 1.5% left by Macri). Clearly, it is impossible to think of economic recovery with such a tax burden. Let's wait to see what happens...
Or to put it another way, we can't support a state that sucks in more that 40% of our GDP but produces nothing. All at the expense of senior citizens, SMEs and the working middle class.
Dec 23rd, 2019 - 03:10 pm - Link - Report abuse +1I would just love to really how much of what the state collects actually reach the really needy ones. I bet that trying to dig deeper into this matter could just get you killed.
EM
“Finally, Argentina got rid of the highway robbers' gang and voted in a real government team.”
You sound like we now had Mother Theresa in the government. Oh you silly cow ...
Good old Boris passed a law in a day then suspended parliament for five weeks so no one could argue, until some days later the Supreme Court ruled it “null and void”.
Dec 23rd, 2019 - 03:24 pm - Link - Report abuse +1Increasing taxes on the middle classes is probably the only way of getting more money in. Taxing the rich is chasing rainbows.
We had a 50% tax bracket introduced for people earning over £80K p/a, so not exactly the superrich, some years later it was scrapped costing more to collect than it was collecting in. 90% of the people in the tax bracket had dropped out.
Getting a functioning/growing economy is the only way to create wealth, otherwise you are simply taxing then borrowing (when there is nothing left to tax) money, to pay people, to be poor, not that much probably gets to them.
Becoming President does seem to be a good way to get very rich in Argentina, irrespective of how the economy/people are faring.
Pgerman is just parroting lies propagated by the dominant Argentine media.
Dec 23rd, 2019 - 05:58 pm - Link - Report abuse -1Indeed, the first bill, approved barely a week after Alberto Fernández took office, will not impose an “unconstitutional freezing of the incomes to retirees.”
Instead, it will allocate by decree two emergency bonuses of 5,000 pesos each -- in December and January -- to retirees getting the minimum pension amount of 14,000 pesos per month.
Progressively smaller bonuses will also be allocated to retirees getting higher pension amounts – to up to 19,000 pesos per month.
During the 180-day emergency, 70 per cent of the country's retirees will see their pensions increased, but the 30 per cent getting the higher earnings will receive smaller increases.
At the end of the six-month emergency, a new formula to update pensions will replace Macri’s formula, conceived to erode their value in relation to inflation.
In his haste to bad-mouth Alberto Fernández, pgerman says his government wants to “show itself as a 'disciplined student to the IMF.'”
Next, and without fear of contradiction, he states “the IMF will surely object to the lack of reduction in public spending.”
All Fernández is doing is to give the poorest the possibility of returning to the habit of eating every day -- which in turn will, in conjunction with other measures, begin to get the economy going again.
There is, however, a silver lining at the end of pgerman's posting:
“Let's wait to see what happens.”
Good boy.
Enrique
Dec 23rd, 2019 - 06:24 pm - Link - Report abuse +1I always thought I was discussing with an adult and not with a boy who lets himself be deceived by slogans thought by the image consultants of politicians.
1) The Supreme Court of Justice of Argentina ruled, during the CFK Government, that it was unconstitutional to update the incomes of the retirees without an explicit publicly known formula that would force the government to comply with the increases. Sporadic, or discretionary, increases of governments are not constitutional. That means that a president cannot decide how much a pensioner earns arbitrarily.
2) By the same ruling of the Supreme Court the income increases cannot benefit only one sector and marginalize others. That is, by the principle of equality in front of the law, and applying the mandatory update formula, all retirees must receive the same update.
3) This ruling forced CFK to generate a mandatory, and equitable, adjustment scheme applicable to all ANSES retirees.
4) Maurico Macri, with much more republican principles and behavior, changed the update formula (clearly hurting them) but the retirees were always with an equitable update scheme.
5) In a interview, Mr. Alberto Fernandez acknowledged to the journalist Majul that “the Government cannot pay the current pensions and we should suspend the indexation of the income of retirees.” That means incomes will not be updated along with inflation.
6) Unconstitutionally, Argentine retirees will be unprotected during six months without a scheme to update their incomes.
Enrique, these are facts, the rest are words. You (I believe) and I are adults. Aren’t we?
Pugol-H
Dec 23rd, 2019 - 11:43 pm - Link - Report abuse 0“And still Greece has one of the lowest tax burdens per head in the EU.”
Official data shows Greece has the 8th highest tax burden in the EU:
https://ec.europa.eu/eurostat/statistics-explained/index.php?title=File:Total_tax_revenue_by_Member_States_and_EFTA_countries,_2017_and_2018,_%25_of_GDP.png
As for Boris, he can't complain. When a king tried to circumvent parliament, he ended his reign 10 inches shorter...
Pgerman
“In a interview, Mr. Alberto Fernandez acknowledged to the journalist Majul that “the Government cannot pay the current pensions and we should suspend the indexation of the income of retirees.” That means incomes will not be updated along with inflation.”
Do you mind linking to this interview?
DT, here is the link
Dec 24th, 2019 - 01:57 am - Link - Report abuse 0https://www.youtube.com/watch?v=1i9ilobDHNU
EM,
“All Fernández is doing is to give the poorest the possibility of returning to the habit of eating every day -- which in turn will, in conjunction with other measures, begin to get the economy going again.”
Pero a los ciegos, no les gustan los sordos,
... y un corazón no se endurece porque sí ...
DemonTree
Dec 24th, 2019 - 01:59 am - Link - Report abuse 0Being interviewed, Alberto Fernandez said: “There is no freeze on the salaries of retirees. The letter of the law does not mean that the increases are suspended, because they will be increased by decree”. This, increases by decree, is in opposition to the Supreme Court of Justice.
Alberto Fernandez: “That was suspended [retirement mobility for 180 days], and not the increases. Remember that this formula almost burned Argentina, so we must change it”
That is, according to Alberto Fernandez words, the increase in the income of retirees is not frozen ... it has only been suspended !!!...nice guy.
According to Alberto Fernandez the “formula” for updating the income, that is the mobility required by the Supreme Court of Justice, “almost burned the country” One can imagine that the collections of the retirees are, “almost”, responsible for the Argentine crisis.
Please, check on the web. The interview Luis Majul performed to Alberto Fernandez can be easily found.
pgerman
Dec 24th, 2019 - 04:25 am - Link - Report abuse 0Don't you come here patronizing those who disagree with your highly questionable opinions.
This boy will remind you that quite a number of our country people have placed their hopes in Alberto Fernandez, Cristina Kirchner and their team so I am in good company.
I do celebrate that you want now the Argentine government to respect the law, even if I do not remember any criticism from you when then president Mauricio Macri governed by way of DNUs (decrees of urgency and necessity), while paying little attention to legislators or anybody else for that matter.
Macri, who according to you has “much more republican principles and behavior,” even appointed two judges to the Supreme Court by decree (he later had to backtrack on that one).
Anyway. As for your constitutional issue with the “Social Solidarity and Productive Reactivation,” law: If it contradicts a previous Supreme Court ruling, I guess somebody will have to challenge it before a judge.
Will Fernández betray the retirees and not increase, at the very least, the equivalent of what they would have under Macri's smart plan? During his conversation with journalist Luis Majul, the president said his political image will be at stake. That is enough for me.
I want to call your attention to the following statement of yours:
”Maurico Macri...changed the update formula (clearly hurting them) but the retirees were always with an equitable update scheme.“
From which I conclude that, for you, the retirees were better off under an update formula that ”clearly hurt them“ but was, at the same time, ”an equitable update scheme.”
My advice? You have four years of Peronism ahead.
Relax and enjoy the show!
Enrique,
Dec 24th, 2019 - 05:12 pm - Link - Report abuse 0You have clearly reached the point that you refuse to discuss about the core issue.
Let me clarify that that, unlike you, I feel no remorse in criticizing Mauricio Macri ‘s government measures of that I did not like or seemed unfair to me. I don't believe in loyalty to rulers, quite the contrary, I believe in skepticism towards them.
1) Argentine current active employees are removed a part of their salary so that, when they retire, 82% of an average of the last salaries would be returned. Any measure that leads to a pension less than that 82% is to steal them. No matter the government.
2) CFK vetoed the law passed by the National Congress that restored 82% mobile to Argentine retirees.
3) CFK refused to generate a formula for updating and other discretionary increases, which was considered unconstitutional by the Supreme Court of Justice of the Nation. That forced CFK to generate an “update formula” against their wishes.
4) Macri, changed the “update formula” for a new one that was bad (according to my personal criteria) but, by the words of Alberto Fernandez, it compromised the assets of the Country until the point that it could “burn the country”.
5) Alberto Fernandez, once again, eliminated the “update formula” awaiting another new Supreme Court ruling (it will take several months) that give him the time (months) he needs to reduce the salaries of retirees.
6) Macri temporarily appointed two Ministers of the Supreme Court due to the resignation (Zaffaroni) and death (Carmen Argibay), something constitutionally allowed, the same two Ministers were ratified by unanimous vote in the Senate of the Nation weeks later.
Clearly, by your words fanaticism guides you. I feel pitty about you.
Pgerman
Dec 24th, 2019 - 09:28 pm - Link - Report abuse 0I sincerely applaud your newfound interest in protecting Argentina's retirees.
When MP reported on Macri's new method to update retirees' income on Dec. 28, 2017, there was only one comment criticizing it and that was my comment.
You were rather quiet at the time, in spite of the fact Macri's formula reduced the real value of pensions by 30 per cent -- but lost no time in becoming the retirees' strident white knight as soon as Alberto Fernandez got his first bill approved into law.
And so, on your first post above you said Fernandez was “freezing” the retirees' pensions. On your most recent post you say in fact the new president will “reduce” said pensions.
Fernandez has said he is neither freezing nor reducing the retirees' pensions.
So I guess at this point it's a matter of believing or not in his word. As much as I predicted Macri was going to be bad for Argentina even before his election, I do put a fair degree of trust in the program of the Frente de Todos.
Time will tell, pretty soon.
And, as I said before, now you can relax and enjoy the show.
Enrique,
Dec 26th, 2019 - 02:47 pm - Link - Report abuse 0“During his conversation with journalist Luis Majul, the president said his political image will be at stake. That is enough for me”.?
Do you remember when Alberto Fernandez told the media the last Government of CFK “was pathetic”? Keep on trusting Alberto Fernandez.....
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