December 21, 2014
Gov't hopeful that US Supreme Court will take Vulture Fund case
The deputy Economy minister Emmanuel Álvarez has affirmed that the government has high hopes that the United States Supreme Court will intervene in Argentina's long-running legal battle with holdout investors, dubbed 'Vulture Funds', over debt defaulted on in 2001.
"The economic team's expectations is that the Supreme Court of the United States take the case," Álvarez signalled to Nacional Rock, referring to the decision that the tribunal is scheduled to make on June 12.
The official also commented on the deal made by Economy minister Axel Kicillof with the Paris Club to pay debt obligations, a move that could possibly reopen international credit lines for the administration of President Cristina Fernández de Kirchner.
"We do not believe that external debt is bad per se. It is good when taken to finance infrastructure project that allow the country to grow and it is bad when used for gambling," Álvarez explained.
"Argentina pays up as long as the payment conditions are sustainable for the country," he asserted, adding that "the vulture funds' business is all about gambling."
The Argentine government is fighting a decisive battle in the US courts, due to the fact that a favourable ruling would mark a new victory on the road to ending the default status decreed during Adolfo Rodríguez Saá's short presidency in December 2001.
On May 25, the country made their final presentation to the US Supreme Court, in which it was requested that rulings from lower courts in favour of the 'Vulture Funds' be revised.
The most positive outcome for Argentina would occur if the tribunal accepts the case and considers that the lower courts wrongly interpreted the concept of pari passu, which ensures that the country must treat all creditors equally.
Previous rulings have ordered Argentina to pay up front around 1.33bn dollars to hedge funds which brought the "junk bonds" in 2008 and did not enter the 2010 debt sqap.
If the nation is forced to pay, those creditors who did enter the swap could start an avalanche of legal proceedings, which could put Argentina in danger of another default.