Creditors demand Argentina to present an "economic plan"
The international creditors and owners of the new bonds issued after the swap released a harsh statement on Thursday in which they stressed they had already done their part by giving Argentina financial relief. Now it is time for the government and the IMF to "do their part", they said.
In a joint letter signed by the Ad Hoc group and the Argentine Creditors Committee (ACC), the bondholders emphasized that the Government aggravated the economic situation after the swap and that today their assets in euros are worth less than after the STEPs. Indeed, the country risk has been above 1400 basis points for weeks.
"Argentina insisted on negotiating the restructuring of its commercial debt before drawing up a detailed economic plan and negotiating with the IMF. The bondholders asked many times during the discussions to specify an economic program and we expressed our concern about what would happen after the closing of the swap. In response, Minister Guzmán opposed giving specific parameters of the economic agenda to the creditors, simply insisting that fiscal sustainability and the rebuilding of international reserves were his firm objectives," the creditors said.
"Unfortunately so far the concerns of the creditors proved to be right. Argentine economic authorities not only failed to restore confidence, but the measures they took after the swap dramatically worsened the economic crisis," they regretted.
They accuse Central Bank President Pesce and Finance Minister Guzmán of not regulating the exchange market, deepening the stock and increasing the exchange rate gap in such a way that the Central Bank cannot accumulate reserves. They are also accused of being silent about their economic plans so that the markets will only wait for more fiscal mismanagement and the bonds will fall. In other words, the growth in country risk is generating losses for creditors over and above those already recognized with the debt restructuring.
"The measures taken to force solvent Argentine debtors to restructure their debts have undermined the basic confidence in the sanctity of contracts. By giving this message that even sustainable debts are not going to be paid, Argentine authorities alarmed many creditors, who are left with doubts as to whether their sacrifices to restructure Argentina were in vain to make Argentina comply in the face of a debtor who may simply not want to pay," they added about the Central Bank's decision to send private companies into default and restructuring.
And while they understand that it was necessary to issue in 2020 because of the pandemic, for them, "it is clear that the intention to have 4.5% of the primary deficit and 6% of the total deficit in 2021 by printing pesos is so damaging to both internal and external confidence as well as being self-inflicted". That is why for them the silence of the Government regarding its plans for 2022 and beyond, "makes the markets to assume the worst and extrapolate from 2021".
In the document they assert that instead of giving rise to the reopening of markets to support Argentina's investment needs, what followed the restructuring is "a virtual wasteland of Argentine credit".
"It is no longer feasible for the government to blame its ills on economic inheritance. After almost a year in government, the authorities have yet to offer a coherent and sustainable economic vision to Argentine society and the markets," they claimed.
"Creditors have already done their part by providing a historic opportunity for the country to start from scratch. It is time for Argentina and the IMF to do their part," they concluded.