Argentina: paying up on GDP warrants
Argentina has confirmed one thing (thought it was never seriously in doubt): it will pay $3.44bn to the holders of GDP warrants in December.
That’s because the GDP warrant payment is linked to the previous year’s growth, and in 2011 it was 8.9 per cent, though it is running downhill fast – putting next year’s payment in doubt (but that’s another story).
Cristina Fernández, will have soothed investors by saying in a televised speech that she would pay what is owed in dollars back in dollars, and she said the government would pay using central bank reserves.
In fact, Argentina is planning a debt-cancelling spree using reserves, and plans to pay off the $2.18bn due this year to international financial organisations in full, according to a decree published in the official gazette. Part of the funding will come from just over $95m earmarked for debt payments but not used in 2011.
The payment is part of the government’s policy of paying down foreign debt, but it will of course boost intra-public sector debt since the Treasury will issue debt to the Central Bank up to a maximum $2.08bn to cover the funds.
Related reading:Argentina’s growth looms over restructured debt, beyondbrics
Argentina: pressure mounts on the peso, beyondbrics
Argentina: lower growth ahead, beyondbrics
http://blogs.ft.com/beyond-brics/2012/06/26/argentina-paying-up-on-gdp-warrants/#axzz1yzuQCfWY
That’s because the GDP warrant payment is linked to the previous year’s growth, and in 2011 it was 8.9 per cent, though it is running downhill fast – putting next year’s payment in doubt (but that’s another story).
Cristina Fernández, will have soothed investors by saying in a televised speech that she would pay what is owed in dollars back in dollars, and she said the government would pay using central bank reserves.
In fact, Argentina is planning a debt-cancelling spree using reserves, and plans to pay off the $2.18bn due this year to international financial organisations in full, according to a decree published in the official gazette. Part of the funding will come from just over $95m earmarked for debt payments but not used in 2011.
The payment is part of the government’s policy of paying down foreign debt, but it will of course boost intra-public sector debt since the Treasury will issue debt to the Central Bank up to a maximum $2.08bn to cover the funds.
Related reading:Argentina’s growth looms over restructured debt, beyondbrics
Argentina: pressure mounts on the peso, beyondbrics
Argentina: lower growth ahead, beyondbrics
http://blogs.ft.com/beyond-brics/2012/06/26/argentina-paying-up-on-gdp-warrants/#axzz1yzuQCfWY
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