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The government moves closer to the U.S. to improve the business climate
El Cronista
August 25, 2008

In the meeting of the Council of the Americans, Tom Shannon will be asked for a gesture on the Paris Club debt, while they seek to "de-Chavez-ize" public finances

LUCIO DI MATTEO Buenos Aires

Throughout this week, the government will seek to rebuild the business climate intending to normalize political as well as economic questions. The market-friendly strategy will be on display especially during the annual conference of the Council of the Americas, which will take place on Wednesday at the Hotel Alvear. The important fact is that Tom Shannon will attend, the undersecretary for western hemisphere affairs from the United States. All of Argentina's top officials linked to economics will be there: the ministers of Economy and Planning, Carlos Fern ndez and Julio de Vido, Cabinet Chief Sergio Massa, and President of the Central Bank (BCRA) Mart n Redrado.

There Argentina will be seen to be seeking alternatives to change its current situation of Chavez-dependent financing. "By order of the presidential couple, they are seeking a way to pay the Paris club. It's an issue that is being working on by the chief of the cabinet, the Economy Ministry and the BCRA. It's also being looked into to not continue with finance operations with (Hugo) Chavez," said a high official source to El Cronista.

The resolution of the debt with the Paris Club has two parts that are difficult to resolve. To pay in a lump sum as was done with the IMF requires tapping Central Bank reserves; while refinancing would lack an accord with the IMF, which almost for three years has not done its usual evaluation of national finances, and would also not tolerate the manipulation at INDEC.

If this didn't put the IMF against them, in the last round at reform Argentina voted against the plans of its leaders. Despite all that, the government will ask Shannon to make a gesture from his good offices to the Treasury to intercede with the IMF with the goal of unblocking the situation with the Paris Club. "Shannon always had favorable positions on Argentina, and makes gestures inside his country to see what position the U.S. takes in the IMF. But he doesn't have the final decision on these matters, and also it's rare that the country would ask for exceptions from that organization," are the pros and cons from a source at the Economy Ministry.

In any case, at the Government House they're betting that, beyond the final result that Shannon can manage, he'll take the message home that Argentina intends "to do their duty and de-Chavez-ize in financial aspects." To reinforce this hypothesis, stepping forward in importance could be Ambassador H ctor Timmerman, and the president and CEO of the Council of the Americas, Susal Segal. The two are also well-received in the financial markets of New York.

In parallel form, the government will intend to move ahead on concrete financial, economic and political issues. On the one hand, on Wednesday or Thursday they will begin bids on bond repurchases that will extend through the end of the year and will seek to reduce maturities not only in 2008 but also in 2009. "We want to advise the market that, at least over the next year and a half, we have our debt maturities under control, showing also the will and capacity to pay," explained a source from the Central Bank.

They will also intend to send signs of normality from the political side. The request for reports that Trade Secretary Guillermo Moreno made to the banks over interest rates runs counter to that; but the official vacuum that will become of that request will act in contrary. Also, the probably transformation in the law on renationalizing Aerolineas will be important. "It's the first post-export tax triumph in the legislature; and as a foreign signal it will be well-seen as a process of consensus that overcame the opposition legislators," said one government operator.