Argentina will be forced to default by 2011 unless the government reaches an accord with investors holding $20 billion of bonds kept out of the last restructuring offer, Stone Harbor Investment Partners says.
President Cristina Fernandez de Kirchner is negotiating terms of an agreement, which the government needs to regain access to international capital markets that it lost after stopping payments on $95 billion of debt in 2001. Since then, Argentina has relied on local markets and loans from Venezuela to meet financing needs, and seized about $24 billion of pension fund assets last year to compensate for falling tax revenue.
This again highlights the importance of the failed coup of Hugo Chavez in 2002. Venezuela's ability and desire to float loans all over South America has put a very tangible crimp in the power of the United States. This is a very good thing, given the long and sordid past that the U.S. has in the region.
However, there are limits to what a rather smallish Venezuelan economy can loan. But through it one can see the potential for a Latin American Fund, or a Developing Nations Fund, as a counterpoint to finance sources dominated by the United States or Europe.
1"Argentina May Default Without Debt Accord"- Bloomberg
2 "Obama Advisor (Larry Summers) Suggests Argentina Won't Get IMF Money -Report" - Dow Jones NewsWires
No comments:
Post a Comment