Habitually indebted Argentina lectures US on monetary policy

The chief of the cabinet of President Cristina Kirchner of habitually indebted Argentina struck back White House concerns over a drop in the South American country’s central bank international reserves. In response, Argentine politico Jorge Capitanich said on December 2, “We have expressed our concern regarding the US because its public debt is over 100% of GDP and because they have trebled their monetary base. Similarly with the UK which has increased five-fold its monetary basis, and has had no impact on inflation. Nobody has mentioned that Argentina has reduced its monetary basis 50%.”
 
US officials had also expressed the opinion that by reaching an agreement with the Club of Paris on its pending debt, Argentina  might make itself more attractive to international creditors.
 
For his part, Capitanich said that the reconfiguring of Argentine foreign debt (which was done in two stages 2005 and 2010, following a default) was “the most successful in history.”  Capitanich also claimed that “75% of the Argentine reserves have gone to pay debts, almost 178 billion dollars in the last decade, and debt not contracted by the current government.”
 
 
(President Barack Obama and Argentine President Cristina Fernandez de Kirchner)
 
“Argentina achieve the strongest growth in Latin America which among other things created six million jobs."
 
“Thanks to this policy and the renegotiation of sovereign debt, I repeat the most successful in history, it has enabled that the adjustment of which everyone preaches did not fall on the back of the Argentine people, but more precisely that avoided adjustment saved the Argentine people and created jobs and better working conditions”, continued the cabinet chief. 
 
Argentina’s financial measures have underwhelmed Washington, which wants to see how the country will address a loss of revenue that has surpassed $15 billion since 2011. Argentina’s international reserves are now below $30 billion. No end is in sight.
 
Even though the Obama administration was pleased by Argentina’s decision to come to an accord with companies that have pending credits to collect from rulings at the ongoing World Bank arbitration tribunal, it expects a likewise move for the Club of Paris concerning $9 billion in debt (capital plus interest).
 
The exposure for the US is not very much: as much as $500 million. But Japan and Germany are looking to collect $2 billion each. They are now very impatient with the land that gave tango to the world. 
 
Should Argentina owe up to its debt to creditors, the Obama administration may then reassess its votes at the World Bank and the Inter American Development Bank boards to deny credits. This would then free up loans from the Eximbank


Spero News editor Martin Barillas is a former US diplomat, who also worked as a democracy advocate and election observer in Latin America. He is also a freelance translator.

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