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Confirmed: an agreement with the Paris Club is being sought
Ambito Financiero
August 25, 2008

The government is newly seeking to reach an accord with the Paris Club, made up of creditor countries. The declaration of the default in 2001 not only hit bondholders but also hit Spain, Italy, Japan and other members of the entity. From the Palacio de Hacienda, the negotiations are being advanced, though only to the technical level. There have also been contacts at the ambassadorial level pointed toward reaching a consensus on an offer.

As has already occurred with the slowing of the rise in public spending put into practice in July, the Paris Club is more from necessity than from a real desire from the government to agree. In 2009, there will not be sufficient funds to face debt coming due. Nestor Kirchner is abreast of it. Still with the financial assistance of Hugo Chavez and the use of funds held by Banco Nacion, ANSeS and AFIP, there will also be a certain de-financing whose amount depends on the fiscal savings obtained month over month next year. And still if they manage to finance the debt coming due in 2009, in 2010 it will be impossible. In the government they're aware of this reality that could overshadow the festivities of the Bicentennial of the May Revolution. For that the presidential decision came to dust off the negotiations.

At the Palacio de Hacienda, allies of Minister Carlos Fern ndez confessed that they are moving in this direction. They rule out for the moment any trips by officials to Paris or Washington. For now, the contacts are only at the technical level, from the Finance Secretariat led by Hern n Lorenzino and the same line from the Paris Club. The obstacle that remains is the the authorization or the good view that must be obtained from the International Monetary Fund for any agreement. Seemingly unsolvable, but they are ever more seeking alternatives. Martin Lousteau, in his time, had gotten the commitment and help of the U.S. Treasury to unblock negotiations. It was through the work of Hugo Secondini, predecessor to Lorenzino at Finance, especially during the meeting of the IDB held in Miami.

Out of time

Will they manage an agreement before the end of the year? It's practically impossible. There is no margin for time and less so with elections in the United States, where previously managed support could come to nothing. What is in sight is that delays are ever more expensive. Still with all pointed toward negotiations, the number of countries involved (the U.S., Japan, Italy, Germany, France all with different pre-existing demands for them to sign on) makes an understanding complex. There is a catalyst, however: the amount in effect that Argentina is ready to use in restructuring the debt. For now, this letter is not ready to be used, but the reserves of the Central Bank are back on the rise, approaching now US$47.2 billion. This is to say that the creditor countries are abreast of this number. The negotiations will be arduous.