Ruling from Griesa in Argentina’s favor
New York judge rejected arguments from a vulture fund
Saturday, November 16, 2013
New York Federal Judge Thomas Griesa rejected the requests of the NML fund, which is led by Paul Singer, regarding the search for attachable assets of Argentina outside the country (the so-called discovery) and rejected that Argentina had violated the order not to change the mechanisms of payment on bonds that already participated in the restructurings of 2005 and 2010, according to a statement released last night by the Economy Ministry.
According to the undersecretary for legal affairs, Matías Isasa, Griesa held a public hearing in the framework of the pari passu case (equal treatment for all creditors), which was solicited by the litigant fund. Its intention, according to the explanation from the Palacio de Hacienda , was that Argentina be considered to have “violated the obligation to not modify the conditions of payment on restructured debt and, for that reason, to submit to the provision of evidence and demand a testimonial declaration at the same time” from Economy Minister Hernán Lorenzino.
Criticism of the funds
"These actions by the vulture funds are pressure mechanisms against a sovereign government. Argentina will continue turning to all the legal instruments in its defense against these kinds of attacks,” said Isasa.
The official, also, argued that the working team in Economy will concentrate on the defense efforts that lie ahead in court. Among them, the recourse of reconsideration of the ruling en banc (with all the judges) and – most importantly – if the U.S. Supreme Court decides to accept the Argentine case.
Blejer: “The country could get debt at 7 or 8%”
The expert said that after settling with the holdouts and the Paris Club, it could ask for external credit to halt the drainage of the reserves. “Without corrections to the economy, there will be a dangerous, gradual decline,” he says.
Saturday, November 16, 2013
by Jairo Straccia
“I am a friend of many officials, but I’m in no condition to advise anyone,” said, laughingly, Mario Blejer, the former president of the Central Bank, when it was mentioned that he was always the eternal candidate for Economy minister within Kirchnerism. He’s optimistic, and asks, in an interview with PERFIL, that the reserves be cared for through external credit.
—The reserves are falling. How much does it worry you?
—The rate of falling is what concerns me. The level of reserves is appropriate. The reserves are important when there is no access to the capital markets. If there was access to the capital markets, the reserves wouldn’t be important. The solution is not to protect the reserves, it’s to make them less important. For that one has to return to the capital markets in some form. Even if it was to pay bonds with other loans.
—Today there is credit but it’s expensive.
—It could come to 7 or 8%. Some private funds are working on some creative ideas that will be able to work to resolve the holdouts issue. It’s the debt with the Paris Club and there was a move in the ICSID.
—Will the debt reduction policy have to be given up?
—One can get a line of credit that helps in debt reduction, because it lowers the cost of borrowing.
—Will new debt taking allow for exiting the currency clamp?
—While there is uncertainty and lack of confidence it will continue to exist. I am not against pesifying the economy, but you have to offer instruments that allow clear security so one can save in local currency. If the interest rate in pesos is not in balance, you won’t have an attractiveness to control the demand for dollars.
—What level of reserves do you image for the end of 2015?
—I don’t know, because it depends on what is done. The external factors will be corrected. On the external part there will be correct measures.
—Do you believe it’s correct to have a split currency rate?
—I don’t know how the split currency rate would be done. In practice today you use a credit card abroad and pay a different exchange rate than the official one, for the advance over income tax. There is already a split rate in practice. The official rate is not the exchange rate of balance, if not, we don’t have this problem. Nor is the blue.
—Why is there a lack of investment?
—The foreign investor sees potential, but there is uncertainty regarding the rules. The price of assets in Argentina is low. Many people think that they will rise.
—Will the “end-of-cycle effect” attract dollars in 2015?
—It is known that after 2015, anyone that comes will make the price of assets rise. But if everyone knows that, they will increase beforehand. 2015 will be advanced in 2014. If it comes early in 2014, why not 2013? If there is some level of rationality, it will come sooner.
—Do you see a risk a crisis?
—No. For there to be a crisis there has to be a bank run or a currency run. Here the banks are fine. And for the currency run you have to end up without reserves, and I believe that the level of reserves is still high for you to get through any kind of uncertainty. And now with the gap there haven’t even been hints of a run. Without corrections, the economy will head towards a gradual decline, dangerous, but not a crisis.
Saturday, November 16, 2013
Por Gustavo Bazzan
The bet placed on paying debt with reserves –as the government says- to not have to fall into the hands of the market and the banks that collect commissions and make juicy deals intermediating funds for the country, is spinning out. In an elliptical manner, it was acknowledged yesterday by Mercedes Marcó del Pont, when she said that “without dogmatism” it will take measures for putting the government again on the radar of those that invest long-term. Those close to the official said that she was referring, in a tacit and approving manner, to the negotiations that seek to “turn the page” and solve the problems in the ICSID, the Paris Club and with the vulture funds.
Indeed. Marcó del Pont didn’t say anything about the impact that there is from financing the deficit of the Treasury (now oscillating around 100 billion pesos this year) with more emission of pesos, which is bringing with it more inflation and less interest in people to save in pesos. There also is no interest in dollars coming in, neither in the long nor short term. The proof of the long-term dollars leaving is in the mining companies. Vale abandoned a project, Barrick cut back its investments. Foreign direct investment is falling fast. It’s all very simple. Whoever has interest in bringing in dollars doesn’t know when to bring them in. The pressure on grain producers and the benefits for Chevron are part of the menu that the government has to splay open to see dollars come into the country. And not even these things can halt the trend that does nothing more than get worse.
Advice that IMF monitoring be accepted
So suggested the director from Brazil in that organization
Saturday, November 16, 2013
by Alejandro Rebossio | LA NACION
The director for Brazil in the International Monetary Fund (IMF), Paulo Nogueira Batista, a critic of the neoliberal policies of the 90s in Latin America, yesterday attended the monetary conference of the Central Bank (BCRA) at the Hotel Plaza, but didn’t leave behind the best message for the local audience.
In a dialogue with the press, he suggested that Argentina go back to submitting to the annual review of the economy, the so-called Article IV, after 7 years without examinations, an issue that is under analysis in the economic team of Hernán Lorenzino as part of his attempt to get closer to multilateral entities in a period of scarcity of hard currency.
"Almost all the members of the IMF are doing this article for consultation,” Nogueira began. “It’s an annual discussion with the staff of the Fund, which makes an assessment, gives its opinion, and could be correct or mistaken, but there is no conditionality, it’s different from a program. It would be useful for Argentina to start this again. It’s not a big deal, it’s a routine obligation. Brazil had its Article IV a few months ago. The report was very critical. Brazil didn’t agree. There is a lot of stigma over the past relationship between the IMF and Latin America, but it’s something that has to be overcome,” he said.
But at the close of the conference, BCRA Vice President Miguel Pesce, seemed to follow a different tune: “We are lucky to not have to count on the IMF’s supervision,” he said.
Nogueira ratified that the IMF board will take up the new Argentine inflation index next month: “It’s in Argentina’s interest and any country’s interest to have the best possible statistics. It’s good for Argentina to have a good index,” the Brazilian economist said.
And he said that he is “hopeful” that the new indicator “will come out at the start” of 2014 and that all the parties recognized that the current one “needed to be addressed.” When he was asked if the new index will acknowledge an inflation of more than 20%, with the consequent increase in the poverty rate, Nogueira responded: “I don’t know. We’ll see.”
Brazil’s representative in the IMF criticizes the lack of support for Argentina on the vulture funds
Saturday, November 16, 2013
by: Ezequiel Orlando
After the near-miss from the director general of the International Monetary Fund in filing an “amicus curiae” in Argentina’s favor before the U.S. Supreme Court, the organization didn’t go back to debating the implications of the lawsuit of the vulture funds. Moreover, as quickly as Christine Lagarde recommended sending support, it was erased from the agenda. There was only a week between the announcements.
The “amicus” simply means an endorsement of one of the parties. While the official had let it be known in advance that she planned on having the IMF take a position, at the end of July she withdrew her statements awaiting progress in the case, but never again was the issue heard of in the Washington offices.
It’s the refusal that arose from President Barack Obama, who heads the country with the biggest representation in the monetary organization. He decided that he would not support the filing at this time in the lawsuit, by which the issue faded away. And nobody rose to challenge the word of the White House.
"For me, it still isn’t clear why the IMF changed its point of view so quickly about the case and decided not to file its formal support,” said, unsatisfied, Paulo Nogueira Batista, Brazil’s representative and that of ten other countries in the multinational entity.
The official told ambito.com that it’s reasonable for the entity to not file its backing so long as it doesn’t have the okay from Obama, since it is a matter of the executive and judicial branches of the United States. However, “the problem should be discussed internally and a statement should be published, even without the backing of one country,” criticized Nogueira Batista on his visit to Argentina. He came to the country to participate in the latest edition of the Monetary and Banking Conference, organized by the Central Bank.
In a personal fashion, the Brazilian supported Argentina’s defense in the lawsuit. “I believe that the decision of the New York Court of Appeals is not correct, but not for Argentina, but for the implications for future debt restructurings,” the economist said. This is because “if the court ends up ruling in favor of the vulture funds, this would make it much more complicated to implement negotiations with creditors.” While he opted to speak in English, by occupying the seat of a South American countries, the economist uses the Spanish word for the “vultures.”
"Restructurings historically exist since money lending began, so the outlook that comes out of this case will be fundamental,” the official acknowledged after speaking at the Plaza Hotel, in the Buenos Aires micro-center.
On the local scene, the economist praised as progress the new price index that the INDEC has constructed for avoiding a red card from the IMF. He even acknowledged that it favors the interests of any country to have better information about prices.”
"There has been progress on statistics so that they reflect the variation of prices in the whole country,” he said. While he acknowledged that there are flaws in the current measures, he avoided specifying if real inflation is greater than 10%, which the statistical agency, which is a dependency of the Economy Ministry, suggests. For that, he recused himself saying that he has not internalized the Argentine economy so much.
"I don’t know what the IMF’s position will be, but it’s an important discussion,” the Brazilian representative acknowledged. However, he reproached the Fund for applying sanctions and threats, since he said that it should have had a collaborative approach.
The monetary entity maintains an orthodox position because the majority of seats are held by developed countries despite the current crisis and the tragic marks it has left on the history of the region by “recommendations” on economic policy. However, Nogueira Batista suggested that the entity’s opinion about Argentina’s statistics will have to be taken as a useful criticism in addition to all those that already exist. IT will be an opportunity to improve the measuring of inflation, so questioned since the government went inside the INDEC in 2007.