July 23, 2014
Kicillof says Argentina, Paris Club have built a 'society'
The economy minister hekd a conference today to brief the press on the agreement reached this week between Argentina and the 19-nation group of creditors. “It is a shared effort,” Axel Kicillof affirmed considering the accord will fuel foreign investments and thus fatten Argentina’s international reserves.
Stressing the debt the Kirchnerite administration has now restructured in France is a debt “previous governments had incurred in,” the minister explained the 2001 default has been hindering trade opportunities with the members of the Paris club.
“This is beneficial, it repairs the condition of irregularity that we had with some of the most important countries in the world that account for 55 percent of the global GDP,” Kicillof insisted pointing out the Paris accord was based on Argentina’s “responsibilities” and that “it will not jeopardize growth.”
The role of the IMF
“We have fixed one of the wrongs that liberalism left us,” the 42-year-old official told reporters as he renewed the government’s criticism of the role played by the International Monetary Fund in the 70’s, 80’s and mostly in the 90’s (the so called “neoliberal decade) that resulted in the 2001-2002 social, political and economic collapse and historic default.
Kicillof went ahead to describe in detail the role played by the IMF in Argentina’s previous negotiations with the Paris Club.
“In general, all the agreements that the Paris Club has reached have been under the supervision of the IMF. If a country had trouble paying its debt, then it turned to the IMF. That is Argentina’s own history, prior to the 2001 (crisis). Each of the governments turned running to the IMF because they could not keep up with the Club’s payments. The IMF lent them the money but also told them they had to commit with the reduction of social spending, the privatization of public companies. That is what we call 'to condition'. It is the lost of sovereignty and of economic independence,” Kicillof stated describing the Argentina-Paris Club 2014 negotiation precisely as “atypical.”
Despite the “interference” of the IMF in all the Club’s negotiations, the minister said Argentina “managed to agreen on a fee payment plan without the IMF.”
The “morality” of the accord
“Once we start making the first round of the debt’s due date payments, the credit agencies (of the states that shape up the Paris Club) will start opening the window again and lend companies money to invest in Argentina. If a company from one of those countries needs credit to come to invest in Argentina, it will access to very favourable interest rates,” the minister explained as he detailed the conditions of the agreement.
“We have agreed on minimum payments that will increase if new investments come to Argentina. This is a society we have created. As long as it creates credit so that companies come and invest here, Argentina will then pay more. It is a sort of shared effort,” Kicillof added referring to what he called the “morality” of the accord.
Following are the details of the payment plan the minister explained in today’s conference:
Payments will be made within the next five years. It could be extended to 7 years.
The total amount to be cleared off is 9.7 billion dollars.
The deal involves an interest rate of 3 percent – Kicillof highlighted previous contracts involved a 7-percent-rate and that “it has now been reduced to less than half of it.”
Axel Kicillof headed the Argentine mission to France that settled the dispute with the Paris Club.
On Thrusday, Argentina reached an agreement with the Paris Club on repaying overdue debts in a landmark deal that should help the country put its record default behind it and open up much-needed sources of international financing.