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Seeking to gain confidence in the U.S.
La Nacion
January 28, 2010

Boudou received the ambassador to try to reduce the doubts and assure her that the debt swap is moving forward

Mart n Kanenguiser
LA NACION

Economy Minister Amado Boudou received U.S. Ambassador Vilma Martinez to try and reverse the climate of mistrust generated abroad from the conflict around the Central Bank reserves.

At that meeting, held on Tuesday, but only known about yesterday, the official confirmed to the diplomat the official "will" to bring the swap forward to exit from the default, sources at the Palacio de Hacienda told LA NACION.

The sources pointed out the good climate of the meeting, in which the ambassador wanted to settle questions about the conflict between the government and the outgoing president of the BCRA, with an overarching look at the future of the monetary entity's reserves.

The representative from Washington sought to have a first-hand source to be able to explain the issue before the government of Barack Obama, where there exists a perplexity from articles published about the matter in newspapers like The Wall Street Journal, The Washington Post and the New York Times.

For his part, the minister didn't have any doubts about accepting the meeting, to try to quiet foreign nerves, just when he's trying to move the swap operation forward to exit from the default in this first quarter of the year.

Considered Boudou's main challenge, he told the ambassador that, politically, there is "total will" to move this operation forward with the financial market.

In the same manner, the minister reiterated that, despite the debate over the Bicentennial Fund having affected the value of Argentine bonds, obstructing the swap is not being sought.

The U.S. government didn't take a formal opinion up to now about the dispute with the Central Bank over the use of the reserves.

Some analysts familiar with the issue believe that it has not taken a stand because in Washington there is also a big debate over the role and continuity of the president of the Federal Reserve, Ben Bernanke, among other reasons.

The Club, waiting

Tied in with this offer that private investors are waiting for with a mixture of enthusiasm and nervousness is the postponed issue of the debt with the Paris Club, which the United States is a part with Argentina's other official creditors.

The minister reiterated to the diplomat that first the government wants to close the deal with the bondholders and then take up the payment of the debt for US$6.5 billion with the Club, which the government wants to do without the International Monetary Fund (IMF), the habitual auditor of these negotiations.

For the United States, both issues are connected: if the government gets a good agreement with the holdouts a certainty which for some debt analysts was dimmed by the conflict over the reserves then it could put forward a reasonable plan with the Paris Club.

U.S. diplomats told local authorities that without that agreement then amidst unpaid bilateral debts they cannot send funds from the Eximbank, the official bank used to finance investments and foreign trade operations.

Before suggesting the controversial Bicentennial Fund project, Boudou had indicated that he was working on a staggered payment plan over six years, at about US$1 billion a year.

He also explained that there have been conversations with the French bank, Lazard, which promised to take steps to try and reach a deal without IMF intervention, something that other countries like Germany and Japan are energetically rejecting.

Lazard promised to collect its fee only if it got a successful deal and if it reduced the volume of unpaid interest.

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