BCN-07, 08 Presidential frontrunner says Argentina ‘virtually’ in default

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ZCZC

BCN-07

ARGENTINA-POLITICS-ECONOMY

Presidential frontrunner says Argentina ‘virtually’ in default

BUENOS AIRES, Aug 19, 2019 (BSS/AFP) – The frontrunner in Argentina’s
presidential race, Alberto Fernandez, said in local press interviews that the
country is “virtually” in default and should renegotiate its bailout loan
agreement with the International Monetary Fund.

Fernandez, a Peronist whose running-mate is former president Cristina
Kirchner, trounced conservative President Mauricio Macri by a wide margin in
bellwether primary elections held August 11.

The shock result sent financial markets into a tailspin, prompting Macri
to promise salary hikes and tax cuts, back-pedaling on his unpopular IMF-
backed austerity program.

On Saturday, Finance Minister Nicolas Dujovne resigned in the wake of the
debacle and was replaced by Hernan Lacunza, a respected economist with broad
political ties.

Fernandez, now the clear favorite to win upcoming presidential elections
October 27, laid out his views of the economic situation in a series of
newspaper interviews over the weekend.

“I would say there is a sole incontrovertible reality and that is that
Argentina under these circumstance is unable to meet the obligations it
assumed,” he told the newspaper Clarin.
“We have to understand that we are virtually in conditions of a default,
and that is why Argentine bonds are worth what they are worth, because the
world realizes that it can’t pay,” he said.

Macri negotiated a 56 billion dollar bailout from the IMF in 2018 to
steady turmoil in the currency market, but after last week’s election rout
the peso plunged 20 percent and Argentine stocks lost 30 percent.

Fernandez pointed to Argentina’s debt default in 2001 as an example of how
to handle the current situation.
“Argentina should fulfill its obligations,” he said. But he recalled that
after the last default, the country negotiated with its creditors “one by
one.”

“We have to sit down to discuss it one by one, as we did with the debt at
that time. Remember that we asked bond holders to accept a 75 percent
discount.”

In an interview with La Nacion, Fernandez said, “The only apparent
solution is to postpone the dates” when debt payments are due.

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BCN-08

ARGENTINA-POLITICS-ECONOMY 2 LAST BUENOS AIRES

– Trade agreement –

Fernandez also appeared to put in doubt a trade deal reached recently
between the EU and the South American trading bloc Mercosur, of which
Argentina is a member along with Brazil, Paraguay and Uruguay.

“The treaty does not exist,” he said. “What exists is a series of points
to be agreed which will require two years of negotiations.”

“What I am going to do with the agreement… (is) take it up, study it,
try to extract the best advantages for Argentina, reject the harmful things.
And if we can reach an agreement, welcome.”

Brazilian Economy Minister Paulo Guedes warned last week that Brazil would
withdraw from Mercosur if Fernandez is elected and attempts to close the
trading bloc.

Fernandez dismissed those concerns as “silly.”

“If (Brazilian President Jair) Bolsonaro thinks that I am going to close
the economy and that Brazil will then leave Mercosur, he can rest easy,
because I’m not thinking of closing the economy,” Fernandez said.

Referring to Bolsonaro, Fernandez said “the manner and arrogance with
which he speaks, among other things, bother me. But the truth is Brazil is
much more important than Bolsonaro.”

BSS/AFP/HR/0945