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Guzmán: "Confidence in Argentina is damaged"

2020-05-31T20:01:49.356Z


The second largest economy in South America was watered up to the neck, then it was caught by the corona pandemic. A haircut should now become a relief - otherwise the ninth state bankruptcy threatens.


The second largest economy in South America was watered up to the neck, then it was caught by the corona pandemic. A haircut should now become a relief - otherwise the ninth state bankruptcy threatens.

Buenos Aires (dpa) - In the midst of a severe economic and financial crisis, Argentina is banking on a new loan from the International Monetary Fund (IMF). "We work very constructively with the IMF," said Economics Minister Martín Guzmán in an interview with the German Press Agency and other European news agencies in Buenos Aires.

"Argentina is launching a new program." The IMF has already granted Argentina the largest loan in its history of over $ 57 billion. However, the fund is extremely unpopular in Argentina. Many people make him responsible for the social hardship after the recent 2001 bankruptcy.

The South American country looks back on an eventful economic history. Once one of the richest countries in the world, it recently suffered repeatedly from extreme inflation, capital flight and a constant change in economic policy with every new government. "Confidence in Argentina is damaged," said Guzmán. "We need economic continuity."

The second largest economy in South America is in a serious crisis. The inflation rate was more than 50 percent recently, and a decline in economic power of 5.7 percent is expected for the current year. The country is suffering from an inflated state apparatus, low industrial productivity and a large shadow economy, which deprives the state of a large amount of tax revenue. The IMF had recently described Argentina's debt as unsustainable.

The government is currently negotiating a haircut with private creditors. "We are all sitting at the negotiating table, but there is still a long way to go," Minister of Economic Affairs Guzmán said in an interview. "We need a sustainable solution that takes into account Argentina's limited opportunities. We only want to make promises that we can keep."

Overall, the Argentine government plans to reschedule approximately $ 66 billion of government bonds issued under foreign law. It offered a payment moratorium until 2023, a sharp cut in interest payments and a small haircut. The creditors, which include large investment companies such as Blackrock, Fidelity, Greylock Capital and Ashmore, have so far rejected the offer. "We are flexible in the combination of the different parameters, but the result has to be affordable for Argentina." If no agreement is reached, Argentina is heading for the ninth bankruptcy in its history.

Strengthening exports is part of the long-term plan of the Economics Minister, who is considered a pupil of Nobel Prize winner Joseph Stiglitz. "Economic growth, domestic market production and exports must go hand in hand to maintain balance," said Guzmán.

However, he is also critical of the controversial free trade agreement between the European Union and the South American economic association Mercosur: "Society has been under-involved on both continents. This makes it difficult to legitimize such a contract."

Source: merkur

All news articles on 2020-05-31

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