Argentina (and Anthrax in Uruguay)

Juan Jose Barrios jota at netgate.com.uy
Fri Nov 2 03:06:38 PST 2001


it was a pathetic speech, followed by Mr.Cavallo telling the usual "good expectations" story. The package includes incentives to activate industry and exports. The problem is that the "voluntary" debt restructure only have one side on the negotiation in place. Neither the IMF and Washington nor the Banks have said anything about it...so it is all mumbo jumbo...I will keep lobers posted

on ohter issues, the US Embassy here in Uruguay is closed for two days: mail apparently infected with Anthrax was detected. It is said the mail was delivered in Mexico.-jj

Ian Murray wrote:


> Argentine President Addresses Economy
>
> By Serena Parker
> Associated Press Writer
> Thursday, November 1, 2001; 8:10 PM
>
> BUENOS AIRES, Argentina -- President Fernando De la Rua went on
> national television Thursday night offering an ambitious rescue plan
> for Argentina's ailing economy that proposes new measures to chip away
> billions of dollars from the country's heavy debt burden.
>
> Speaking in a prerecorded national address, the president sought to
> defuse a week of growing investor uncertainty over the country's
> ability to avoid default on its $132 billion in debt, vowing his plan
> would in no way interrupt debt servicing payments to creditors.
>
> "We will meet our obligations" to creditors, De la URA said in an
> address from the pink Government House. He vowed Argentina would not
> default or devalue its peso currency because of the grave economic
> crisis.
>
> He said he wanted to reduce the debt-servicing costs that have forced
> the cash-strapped state to dispense with hundreds of millions of
> dollars a month to creditors. The plan called for bringing high
> interest rates down to single digits.
>
> In his most important economic address in two years in power, the
> president bluntly told his 36 million compatriots that they simply had
> rung up far too much debt and that the country had no other choice but
> to take bold steps and seek a voluntary debt renegotiation
>
> De la Rua and Economy Minister Domingo Cavallo want to restructure the
> country's debt load by offering greater payment guarantees in exchange
> for lower interest rates. The president said he was seeking new bonds
> at interest rates of 7 percent.
>
> It's not clear if foreign lenders would be willing to accept such a
> move, which Cavallo's team characterized as "voluntary." Nervous
> markets had been awaiting the plan all week and the first test of its
> soundness is expected when trading resumed Friday.
>
> Credit agencies have warned that a debt swap might be considered a
> partial default.
>
> De La Rua also called for the nation to rally behind him in a time of
> crisis. He went ahead with his announcement despite a political
> impasse that continued Thursday with 23 provincial governors who
> balked at his calls to enlist in his effort to balance the budget.
>
> The debt crisis has worried Wall Street and emerging markets for
> months as Argentina teetered on the brink of a possible default.
>
> Argentina's unemployment rate has been stuck in double digits for
> years, the economy is stumbling after seven punishing rounds of
> austerity measures, and some cash-strapped provincial governments have
> resorted to paying state workers partly with bonds in lieu of cash.
>
> With state coffers dwindling, De la Rua is locked in a bitter
> political impasse with the governors over the federal government's
> failure to pass along more than $500 million in tax revenue owed to
> the provinces.
>
> But the government has said it doesn't have the money at a time when
> Argentina must come up with $1.1 billion to service its debt this
> month and another $774 million in December.
>
> The International Monetary Fund apparently has no immediate plans to
> come to the rescue, as it has twice already since December. An IMF
> official, Thomas Dawson, told reporters in Washington Thursday that
> releasing any funds ahead of schedule was "not in the cards" at this
> time.
>
> Argentina's next IMF loan is a $1.3 billion installment that will be
> available in December.
>
> Argentine governors resumed meetings Thursday to discuss the federal
> government's proposal for spending cuts and tax-revenue sharing
> measures. But differences remained between the two sides.
>
> As well as offering a strategy for debt, the president on Thursday
> also offered sales tax relief to those who make purchases with credit
> cards. He also proposed modest payments to low-income households and
> the unemployed to spur consumer spending.
>
> However, critics say far more needs to be done to encourage consumers
> to begin spending again, a necessary step to raise badly needed tax
> revenue to pay off the debt. On Thursday, the government announced
> that collected taxes fell 11 percent in October after plunging 14
> percent in September.



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