November 27, 2014
Economy Minister confirms international support for Argentina in vulture funds case
Economy Minister Axel Kicillof returned from Washington satisfied. In the past three days he was able to confirm the genuine concern of numerous countries and even the International Monetary Fund (IMF) regarding an adverse ruling in the vulture funds case against Argentina.
The Argentine delegation returned “very satisfied” having accomplished a public statement on this subject in the G24 document that warns that any resolution from the US Judiciary “that stimulates a predatory behaviour” from holdouts “could undermine the basic architecture for sovereign lending and debt resolution.”
An adverse ruling could mean the absence of “international legislation for any country to restructure its debt,” Kicillof explained in the different forums he attended during the 2014 IMF Spring Meetings.
Another satisfaction for the Argentine authorities in this visit to the Fund was to learn more details on Christine Lagarde’s tough fight with the US government so the IMF could file an “amicus curae.” Although this battle was lost, some say it was Lagarde herself who arbitrated in favour of France for it to show its support. Kicillof pointed out that the Fund is still expressing its concern regarding an adverse ruling, a posture which is valued by Argentina.
Surely, these feelings were analyzed during Kicillof’s meeting with Paul Clement and the team of lawyers from Cleary Gottlieb’s firm, who are in charge of the Argentinian defence in the case against the vulture funds.
On the other hand, the head of the Economy Ministry, pointed out the “concern” from important emerging countries regarding the US monetary stimulus cuts, which entail “huge risks” due to the “strong fluctuations” they cause in several emerging countries such as China and other Asian nations, South Africa and Brazil, among others.
Kicillof pointed out that the general consensus is that the global economic recovery is fragile and that “no one is willing to bet too much on it.”
In the meetings he attended held by the G20, G24 nations, as well as those of the IMF and World Bank, the Minister could also gladly confirm that the “heterodoxy” view of the Argentine economy which focuses on growth with social inclusion has had the approval of numerous countries.
In fact, after the 2008 crisis, the IMF itself encouraged policies that stimulate the creation of jobs and social inclusion. Although it seems as if this change of direction remains still in a declamatory terrain, after, for instance, watching some of the policies it is still recommending for Europe.
It is worth recalling that the Fund compared Argentina’s economic situation with that of Venezuela, foresaw a “notable” slowdown in the country’s economic activity for this year and warned about a context of “high uncertainty.”
With technical arguments and estimates made by the IMF about Argentina’s and the world’s economy, that according to Kicillof never proved right, he defended his position. Moreover, he highlighted the fact that 4.3 percent was published as the “official number” for the increase in the GDP in 2013, when Argentina never informed that number. Therefore, the Minister considered that the Fund should clarify this to the member countries.
Lipton defended the organization’s stance and in more than one occasion the discussion turned into an agitated one, but just “as academics usually discuss.”
Alejandro Werner, IMF Director of the Western Hemisphere Department, was in charge of making sure that the meeting with Lipton didn’t cause any resentment, and he showed his willingness to clarify that Argentina is still not accepting the visit of IMF’s officials to fill the report known as Article IV. Werner explained that there was progress made on the matter of the INDEC’s statistics, such as the new consumer price index and the GDP.
Like Kicillof, Werner explained that the IMF is not an active part in the negotiation between Argentina and its Paris Club creditors, including the meeting scheduled for next month, but only an “observer” party.
Kicillof also took the time to listen to the concerns of the leaders of key American companies with investments in the country, after a lecture on the Government’s prospects for the economy. Executives from oil, energy, mining, food, agroindustrial, consumer-goods, chemical and technological companies, among others, attended the meeting.