(continuing story) Argentina and the IMF

events continue to unfold in the argentina bondholders' debt swap saga... (see posts, "Argentina and the IMF," tuesday, april 5, and "Argentina update," thursday, april 7...)

from the buenos aires herald)

Speaking on Sunday in Japan at the Interamerican Development Bank’s annual meeting, [Argentina Economic Minister Roberto] Lavagna said the holdouts [the 24 percent of bondholders that refused to enter into the debt swap] would be dealt with in due time, a comment many of his listeners interpreted to mean that Argentina could eventually reopen the swap. But speaking on a local radio programme 24 hours later, the minister said nothing had changed: the government had no plans to reopen the swap and the holdouts might not ever collect (though he did acknowledge they constituted an "eventual liability").

[...]

From a tactical standpoint, the minister’s flip-flopping is understandable. On one hand he faces pressures from the IMF and some of its leading shareholder countries that are insisting that Argentina come up with a "realistic" strategy to deal with the holdouts. On the other, the government has staked its reputation at home on not giving ground on the matter. Congress, at the government’s behest, passed a law forbidding any reopening of the exchange or settlements with holdouts.

[...]

In other words, we are headed for more of the same endless bickering that characterized the two sides’ relationship before they "suspended" it seven months ago. The difference is that time is no longer on Argentina’s side. International conditions are less favourable, investors are still staying away and, under current conditions, the rapid growth of the last couple of years cannot be maintained without fuelling inflation.

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