Argentina: US decision could prevent debt payments.
The Argentine government issued a statement indicating that a US court decision could prevent it from honoring its debt obligations on June 30th; this could mean the country may default on its debt again at the end of the month. Argentina is due to pay US$900 million on June 30th; the last default occurred in 2001, when Argentina faced its worst economic crisis.
Monica Yanakiew - Correspondent for Agência Brasil/EBC
The Argentine government issued a statement indicating that a US court ruling could prevent it from honoring its debt obligations on June 30th. This could mean the country may default on its debt again at the end of the month. Argentina is due to pay US$900 million on June 30th. The last default occurred in 2001, when Argentina faced its worst economic crisis.
When Argentina emerged from its last crisis, it proposed to creditors a debt settlement with a 60% discount. At the time, 93% accepted the agreement and have been receiving payments in installments. However, the remaining 7% refused to renegotiate and appealed to the US courts, winning in the first instance. The US Supreme Court rejected the Argentine government's appeal to review the decisions of the lower courts, which favored the so-called "vulture funds" that bought "toxic" debt bonds at a discount and then went to court to receive the full amount.
If Argentina has to pay the full amount, it will have to disburse US$15 billion, more than half of the Central Bank's reserves. President Cristina Kirchner said she will find a way to pay the creditors who agreed to renegotiate the debt. On the 17th, the Argentine Minister of Economy, Axel Kicillof, said that the country will try to carry out a new exchange of public debt securities under Argentine law to ensure payment to holders of restructured bonds.