Seeking to announce agreement with Paris Club before the end of the year
That is the goal of the Economy Ministry. The IMF would not intervene.
Wednesday, November 13, 2013
By Tomas Canosa
The government hopes to be able to announce before the end of the year that it will pay the Paris Club. The economic team dismisses being able to close a definitive deal in 2013, but are confident in being able to finalize all the details for the balance that comes to US$9.6 billion during 2014. They assure that the IMF would not intervene and that the payment plan would not require large disbursements in the first years.
Economy Minister Hernán Lorenzino is working all the machinery for the government to be able to make an announcement related to the Paris Club before the end of the year.
“If there is something I have done throughout most of my professional career it has be to restructure debts,” he always says before economists and businessmen that visit him in his offices.
Clarín reported last week that the President asked him to move forward in this direction and in the Ministry they rule out making a payment with reserves in cash, as had been proposed in September 2008. This project was abandoned after the sparking of the international crisis. An important official on the economic team said, in a dialogue with Clarin, that the government is aware of all the restrictions on it for negotiating, and one of them is the level of reserves. The Central Bank’s assets were US$47.008 billion in September 2008 and yesterday they closed below US$33 billion. For this reason, the schemes circulating in the Palacio de Hacienda contemplate no large disbursements during the first years.
Why is the government insisting on paying the Paris Club? The economic team argues that an agreement in this direction would translate into the arrival of greater investments because companies from the creditor countries (United States, Germany, Japan, France and others) would be able to get lines of cheap financing in their countries to be able to invest in Argentina. If the Club is not paid, the companies will not be able to get subsidized credits.
If the government effectively gets to close a deal with the Club, this would in principle translate into a larger outflow of hard currency through debt payments. According to statistics published Monday by the Economy Ministry, the public debt in June 2013 reached US$196.143 billion and is equal to 43.6% of GDP. This means that the balances went down compared to December, when it was 44.9% of GDP, but increased if the comparison is made with June 2012, when the balances represented 41.5% of GDP.
The agreement with the Paris Club is part of the international agenda that Lorenzino is carrying out and it complements the negotiations with the World Bank and the ICSID. The official even is one of those in charge of negotiating with the IMF for the new Consumer Price Index (CPI) at the national level and which according to sources close to the minister, will begin to be published in the first quarter of 2014.