Debt: all bonds will enter the exchange


Although the number to negotiate impacts, it is 38% of the total public debt what the country owes and that en total reaches 324.037 million dollars, according to the latest consolidated data of the Ministry of Economy as of December 2019, equivalent to 88% of Argentine GDP. Then, in importance, the debt with international organizations is located, for a total of 72,680 million (and that includes the US $ 44,000 million of the stand by loan to the International Monetary Fund) and about 46,352 million issued in pesos under national legislation. However, that 38% conditions the rest of Argentina’s debt, since (together with that of the Fund) it is the one that is unpayable in the medium term and must inevitably be restructured. And with a considerable removal in terms of capital and interest.

The first political decision that the Government had taken was to renegotiate only the debt issued during the government of Mauricio Macri, which reaches about US $ 50,000 million, including all bonuses designed in the times of Luis Caputo as finance secretary first and minister later. The primary intention, especially on the part of Kirchnerism, was to present to the world that it is only the public securities launched by the macro management that the country cannot pay, making it clear to the creditors that own this liability, especially the funds of investment that reached the local market through Caputo, which are jointly responsible for the country’s new financial debacle. And that consequently they must take care of the heavy punishment that will come to them, under the name of a removal of the credits and extensions of the payment terms.

It was the functional presence as a leading actor in the process of Monetary Fund, which changed the strategy. The technicians of IMF who inspected until last week the local numbers, headed by the Julie Kosack, Deputy Director of the Department for the Western Hemisphere, and the person in charge of the Argentine case, the Venezuelan Luis Cubeddu; established that before the creditors there can be no distinctions on which government each type of debt was issued but the general criterion is that the total of the bonuses launched under foreign jurisdiction are unpayable. Including the one issued during Néstor Kirchner’s government to leave the default, and that amounts to about US $ 20,000 million, especially concentrated in the main bond owed by the country: the PBI Coupon for which some $ 12,787 million are owed. The mission of IMF determined that the definition of “non-sustainable” debt is general and does not exclude liabilities issued by different governments, but has been issued in foreign jurisdictions. Kosack and Cubeddu, with the endorsement of the head of the agency, Kristalina Georgieva, clarified to the Government that there should be no distinction and that all liabilities should enter into a general review, so that the Executive had no choice but to incorporate the bonds issued to get out of the 2001 crisis. It will not be easy for the Government to present this chapter. It is not common for a country to renegotiate the default most important in the world (the one of 2001 under the exchange of 2005) and then call the holders of that debt again to restructure the structured. The consolation is that most of the creditors are banks and investment funds and that very little of the former original holders of the debt fell out of favor after the collapse of convertibility.