HAVANA TIMES — Argentina has reached the last stretch of a decisive economic and political road, facing the end of the term established for the payment of an international debt and a thorny litigation in the United States, DPA reported on Sunday.
If Argentina fails to settle its 539 million dollar debt this coming Wednesday – completing the payment of the sum Argentina deposited in a New York bank and US judge Thomas Griesa froze this past June – the country will default on its payment, as it did in 2001.
Faced with this situation, President Cristina Kirchner is assessing different strategies to confront the possibility of defaulting on the debt, including the application of measures that encourage domestic consumption, maintain credit programs for the purchase of homes and automobiles, halt the lay-off of workers and guarantee financing for small companies, the Argentinean newspaper La Nacion reported.
The default “is not going to have tragic consequences” for the country “because this isn’t 2001 and the domestic market is going to continue to perform as it is doing now,” national deputy Hector Recalde stated today.
The legislator insisted on the argument the Argentinian government made public in recent days through different spokespeople and officials, including Cabinet President Jorge Capitanich: “life goes on, even when one defaults on a loan.”
Clarin newpaper reported today that the Ministry of the Economy “believes that the impact on the economy will not be of the magnitude felt following the 2001 default,” which Argentina, mired in a profound political and social crisis, experienced during the brief presidency of the current Peronista deputy Adolfo Rodriguez Saa.
In this connection, the morning paper Pagina 12 editorialized that the economic situation that will result from a potential default “will not be in the least agreeable, but it won’t spell the abysmal crisis heralded by those that need a crisis to impose conditions on the country and its inhabitants.”
The president of the Union Industrial Argentina (“Argentina Industrial Union”) expressed disagreement with this, stating that the country’s economic situation “is extremely serious and cause for concern and alarm,” and that, consequently, it “should not be left in the hands of two people alone,” alluding to President Kirchner and Minister of the Economy Axel Kicillof.
“Argentina is not going to default on its loan for a real reason: countries that do not pay their debts default since Argentina paid its debt. They’re going to have to invent a new name for it,” said Kirchner on Wednesday, referring to the 539 million dollars that the Argentine State deposited in the New York Mellow (BONY) bank at the end of June to settle and overdue restructured debt.
This payment, however, was blocked weeks ago by Judge Griesa, who insists it cannot be made effective until Argentina fulfills its obligation of paying 1.5 billion to the holdouts who, on two occasions (2005 and 2010), did not accept a partial acquaintance of the debt, what Argentina refers to fondos buitre (“vulture funds”).
Argentina has reiterated that it cannot abide by the ruling because, were it to do so, it would be breaching the RUFO clause, which bars it from reaching a more convenient agreement with the debtors than the one already accepted by the holders of the restructured debt bonds.
The country has until next Wednesday to reach an agreement with the “vulture funds” in order to effect the payment of the sum deposited at BONY or, as it has requested on a number of occasions, to have Griesa extend the negotiations term. If it fails to do so, it will default on its loan.