Meeting the Moneybags: Argentina Faces Paris Club

♠ Posted by Emmanuel in , at 3/26/2014 11:19:00 AM
It won't be easy--you'll think it strange--when Argentina tries to explain how it needs to rejoin international credit markets after all that it's done. You won't believe it; all you will see is a serial defaulter you once knew. However, it is indeed trying to, ah, the sixes and sevens with you. Over the past week or so, Argentinian President Cristina Fernandez has been in Paris trying to arrange a meeting with the group of rich government lenders--the so-called "Paris Club." Her objective has been to pay off its rather substantial remaining debts so it will have more than limited access to international credit markets. From the Buenos Aires Herald:
Crisis-ridden Argentina will start in a couple of months talks on the US$9.5 billion it owes to the Paris Club of creditor nations in an effort to lure back investments ahead of next year’s presidential vote but even the government and its supporters as well as its critics warn that even in the case of an agreement, there is much more to be done before the money starts flowing.

The 19-member informal Club of creditors who hold 60 percent of the International Monetary Fund’s voting power has just invited the country to hold talks as from May 26 and French President Fran├žois Hollande last week told Argentine President Cristina Fern├índez de Kirchner in Paris that “France wants Argentina to overcome its financial problems” and that Buenos Aires “is managing to do so.”
Argentina halted payments to the Club in 2002 amid its worst meltdown in history, which led it to declare the world’s largest-ever debt default. Repaying the debts to the Club is part of a wide-encompassing strategy of the Peronist administration to re-insert the nation[...]into the international circuit.
Circuits of capital? Even Argentinian newspapers sound retro-Marxist [!] The country is being pressured by credit downgrades and dwindling reserves. Somewhat counterintuitively, it will have to draw further from its reserves to pay off its debts. Go figure. Rest assured though that ne'er do well Argentina is a warily familiar face opposite the Paris Club:
Last Monday, Moody’s Investors Service further cut Argentina’s government bond rating into junk territory, saying that the drop in Central Bank dollar reserves has raised concern about the country’s ability to pay its debt.

The Paris Club website says that it met for the first time in 1956 at the request of the country, which was concerned about defaulting on its sovereign debt. Buenos Aires attempted repeatedly to resume talks with it. In 2008 the two sides were close to striking a deal but Argentina pulled out at the last minute, concerned about its foreign reserves amid the global crisis. Another attempt was made in 2011.

The Economy Ministry last week issued a statement reading: “The members of the Paris Club have invited us to start formal negotiations toward the end of May. Our proposal seeks to develop investment inflows with the objective of confronting new challenges after a period of 10 years of high and sustained economic growth.”
Paris Club Secretary-General Clotilde L’Angevin was quoted by Reuters as saying: “They discussed this proposal in January and February, asked for clarification and, based on a revised proposal, have invited the government of Argentina to come negotiate an arrears clearance agreement with the Paris Club creditors in May in Paris.”
Comrades and IPE enthusiasts, mark your calendars: Argentina meets its nemeses--Western rentier capitalist bourgeoisie--on May 26. Having ruled out another IMF bailout, debt reduction is not on the cards. For some reason I am not very hopeful about Argentina's prospects.