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US and Argentina seek solution for the Paris Club
El Cronista
August 26, 2008

LUCIO DI MATTEO Buenos Aires

The arrival of Tom Shannon will have, among other objectives, the goal of seeking solutions for the Argentine financial situation. "The government of the United States has interest in Argentina finding a solution for its financing problem. We are still looking for a formula for this, but they don't want to see problems in the region," said a high level source at the Central Bank to EL CRONISTA. "The fact that we have to go back so often to (Hugo Ch vez) doesn't make them the least bit happy", he added.

The importance that the finance issue would have during the visit of the subsecretary for Hemispheric Affairs was confirmed from the private sector. "We are all interested in Argentina resolving this situation, inserting itself more in the world and returning to getting international financing. What we can do to collaborate in this sense will be very important," said the top official at a U.S. bank with a local presence.

In concrete terms, US help could be directed to the Argentine debt with the Paris Club. The refinancing of same requires approval of the International Monetary Fund, where the country presided over by George Bush has the heaviest individual weight. "If we depend on the bureaucrats of multilateral organizations, that debt will never be refinanced, because it's treated as a secondary issue for them. For that we need the political push from the U.S. and Europe to move the issue forward," explained an Argentine government source. In this sense, from the government circles they are closely following Shannon's visit, as well as the visit by Lucas Papademos, vice-president of the European Central Bank.

From the U.S., the exiting Bush Administration and very probably the next one also is seeking ways to make sure the international financial crisis has the lowest possible impact on Latin America. "In some cases the regional situation acts as a trigger of a previous situation, and in other cases as one of its last causes. Whatever the case, up north they are not interested in developing any of those hypotheses," said one international financial analyst.

With some hope, the leadership of the Central Bank who were consulted said that "when he tried to negotiate with the IMF, Bush didn't throw sticks in the wheel from the time he'd say that he was the main mediator between the Argentine position and that organization." What they hope at the Argentine monetary authority, as well as at the Economy Ministry and the Cabinet Executive (the committee charged with handling the financial situation) is that the US be decisive in resolving the debt with the Paris Club. From other corners, and with less optimism, they think that this will be difficult while the CPI continues to be tampered with, and there are so many bondholders with about 20 billion dollars pending that didn't enter the swap.

On the other hand, while in the last placement of public debt they paid more than 15%, and the only interested party was Venezuela, those inside and outside government believe that the situation could improve. "While it may seem difficult, next year we would be attractive for the general market," said an ex-finance secretary on the condition of anonymity. "If the debt emitted by countries with investment grade pays 7%, perhaps we could place at a rate of 9.5%. For that two things have to be done: the new bonds have to be in dollars, and there have to be talks with the bankers. This would show them the convenience of those bonds with rates obtained at national or international public auction."