05/06/2020 - 11:41
- Clarín.com
- Economy
- Economy
A group of 138 economists from 20 countries, including Nobel laureates Joseph Stiglitz - a kind of godfather to Minister Martín Guzmán - and Edmund S. Phelps, urged Argentine bondholders to adopt a "constructive approach" to the proposed government debt restructuring. They did so with a letter that Stiglitz released on his Twitter account.
"The responsibility lies with the private creditors to act," maintains the open letter also signed by other experts known as Jeffrey Sachs, Carmen Reinhart and Thomas Piketty under the title "Restructuring Argentine debt is essential."
The absence of an international legal framework for sovereign #debt #restructuring should not deprive indebted countries like #Argentina of the ability to protect their people and provide for economic recovery. Read our letter below. # COVID19 https://t.co/kS4Rea2mQQ
- Joseph E. Stiglitz (@JosephEStiglitz) May 6, 2020The document reaches days of the deadline set by the Government for the closing of the offer, on Friday the 8th . The main bondholders have already announced their opposition to the terms of the proposal, while Minister Martín Guzmán urged them to present a counteroffer. Argentina proposed capital and interest cuts, a three-year grace period, and a sharp drop in interest. Argentina did not pay maturities of US $ 500 million bonds on April 22, so if it does not cancel them or reach an agreement with creditors before May 22, it will default.
Guzmán worked with Stiglitz at Columbia University in New York before taking up the Ministry of Economics.
Joseph E. Stiglitz, Nobel Prize in Economics. Photo: AP
"Argentina has presented a responsible offer to creditors that reflects the country's ability to pay and is in line with the IMF's technical analysis," added the letter from the economists.
"A constructive approach towards Argentina will demonstrate that the international financial community can face a sovereign debt crisis in an orderly, efficient and sustainable manner," he maintains.
The letter says that both Argentina and bondholders would benefit from negotiating a sustainable debt renewal agreement, as the coronavirus pandemic reduces global economic activity and the government's ability to pay its debts.
Impeccable this document. I fully subscribe. The average (simple) annual coupon of the offer is even higher: 3.4% per year. 6 times more than the rate in the USA, which is what those who won trials against Argentina in the past decade had to accept.
https://t.co/xF2iotaJ7o
“The Covid-19 pandemic is driving an unprecedented global crisis. The tragic loss of life and economic activity has pushed humanity into the worst global recession in modern times. The pressure on public finances has become enormous, particularly in developing countries that were already heavily indebted, "the letter says.
"Now is the time for private creditors to act in good faith . A responsible resolution will set a positive precedent, not only for Argentina, but for the international financial system as a whole," he concludes.
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