April 18, 2014

Meeting this friday on debt refinancing

Tuesday, December 24, 2013

Capitanich summons governors

The government will refinance the bulky debts of 18 provinces every three months, Cabinet Chief Jorge Capitanich said yesterday after slamming Corrientes Governor Ricardo Colombi’s (UCR) suggestion his province printing pseudo-currencies to meet its obligations in the face of inflation, calling it “an exaggerated outburst.”
Capitanich summoned provincial leaders to a meeting at Government House this Friday to sign the accord, which involves the “refinancing of debts that will be valid for three renewable months through a compensation system and input from the national Treasury.”
The accord will be signed days before the December 31 expiration of the previous deal, which allowed for the automatic refinancing of debts.
“That will generate conditions in the sense of depreciation of debts for the provinces, in satisfactory conditions for them,” Ca-pitanich expressed.
The Chaco leader emphasized that 74 percent of tax revenue during 2013, or approximately 634.84 billion pesos went to the provinces.
He did not specify, however, which of the 24 provinces will be included in the new scheme, which previously refinanced debt in periods of at least two years.
“Certain types of problems cannot be encouraged (when) the numbers are so strong,” Capitanich continued, calling for officials to be responsible in what they say to the press.
Speaking at his routine morning news conference, the Cabinet chief described Colombi’s statement as unfortunate, considering that all provinces signed agreements in 2003 and 2004 “to refrain from issuing any other payment instrument.”
“Between 2003 and 2013, (cash) transfers from the national to provincial governments increased by 1,024 percent,” Capitanich said, rejecting the claim that the provinces are under-funded.
Capitanich described the accord to be signed on New Year’s Eve as a “modification of the (legal) parameters” regarding “federal revenue sharing of taxes.”
According to the Cabinet chief, the restructuring of provinces’ public debt will free up the “flow of capital services and interests with the national government.”
The provinces’ debts with the central government currently stand at about 85 billion pesos, or US$13.188 billion.
Provincial debts have been aggravated by a deficit caused largely by spending on the wages of an expanded public sector.
Last week, Colombi said he has a plan to print a pseudo-currency to pay the province’s debt, and that several provinces have contemplated the same idea.
Herald with Dyn, Télam
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