Category: Argentina

Argentina’s Economy Minister Roberto Lavagna said the country is ready to begin talks with the International Monetary Fund on a new loan accord, but won’t accept IMF demands that would threaten the country’s economic growth. The fund last year put on hold a $13.3 billion loan accord with Argentina while waiting for the country to restructure $104 billion in defaulted debt. In February, 76 percent of bondholders agreed to the country’s restructuring offer. The fund is now pressing the Kirchner government to negotiate with holdout investors, including billionaire Kenneth Dart who tried to holdup the restructuring in US courts.

Moody’s raised its debt rating on Spanish-Argentine oil company Repsol-YPF from Baa2 to Baa1, citing the company’s “solid” financial profile, its assets diversifying strategy and the improvement of its operations in Argentina. The company has recently invested in Trinidad & Tobago, Algeria, Libya and elsewhere in the Medium East.

Argentina raised the minimum state pension by 16 percent to $122 a month, at a cost of $250 million this year. The government will pay for the increase out of its primary budget surplus. President Nestor Kirchner is still trying to meet workers’ and pensioners’ wage demands four years after the country’s 2001-2002 crisis cut purchasing power more than 20 percent.

Argentina must reach agreement with the International Monetary Fund before the World Bank will release $870 million in loans, said World Bank Vice President Pamela Cox. Last year the World Bank approved $2 billion in loans for Argentina, but has disbursed only $330 million so far. The IMF is pushing Argentina to come to terms with holdout investors, including billionaire Kenneth Dart, who did not take part in the country’s debt restructuring.

Argentina’s Supreme Court ruled that two immunity laws covering military officers accused of human rights violations during the 1976-83 dictatorship are unconstitutional, allowing hundreds of lawsuits to be reopened. An estimated 30,000 people were killed or disappeared under the dictatorship.

Argentina plans to seek a new loan agreement with the International Monetary Fund that would allow increased government spending. The country’s current agreement with the IMF stipulates it run a primary surplus of three percent of GDP, but government officials argue that figure is excessive and hope to negotiate it down in discussions with the Fund. President Nestor Kirchner is facing pressure from government employees who are demanding increased wages, even after receiving a 15 percent pay raise last year.

Argentina will require international investors to make a one-year, no-interest deposit amounting to 30 percent of any local capital market investment. The government is trying to discourage speculators from investing in the country after the restructuring of about $104 billion in bonds. An increased inflow of money from abroad caused the central bank to more than triple its purchases of dollars in May to an average $74 million a day from $23 million the previous month.

The World Bank a $150 million loan for Argentina to finance road construction and maintenance projects. The four-year loan will benefit the provinces of Córdoba, Santa Fe, Corrientes, Neuquen, Entre Ríos and Chubut.

Venezuela plans to buy another $100 million in Argentine bonds this month in the second tranche of an operation that could reach $500 million. S&P rates Argentina’s debt B-, six levels below investment grade.

Bolivia is streaking ahead in the race to become Latin America’s first failed state. It faced stiff competition from Argentina, from Venezuela and Ecuador, but now it’s in a class of its own. President Carlos Mesa announcing his resignation stated in a pitiful speech: I’m really sorry if I’ve been incapable of governing Bolivia well.” How right he was………

Bolivia really could have succeeded. Its reserves of natural gas could have generated enough money to make a far-reaching attack on poverty and social exclusion. The economy did grow and poverty has receded, but Bolivia’s elites, political parties and institutions failed to mature.

Nationalizing the gas industry will further isolate Bolivia and ensure that most of its gas stays in the ground. Limited exports will benefit only a clique of corrupt bureaucrats and politicians. Latin America’s narcomafias are descending on Bolivia as are every political opportunist around, led by Hugo Chávez of Venezuela. Chaos and corruption will accelerate regional, social, and ethnic fragmentation, creating an unstable state in the very heart of Latin America. It’s time Latin America’s sane leaders – President Luiz Inácio Lula da Silva of Brazil or Tabaré Vázques of Uruguay – stepped in to calm the hysteria in La Paz.