News / Americas

Argentina, US Creditors Fail to Reach Deal; Default Imminent

Axel Kicillof, Argentina's economy minister, addresses member of the news media after a negotiation session at the Argentinean Consulate in New York, July 30, 2014.
Axel Kicillof, Argentina's economy minister, addresses member of the news media after a negotiation session at the Argentinean Consulate in New York, July 30, 2014.
VOA News

Argentina’s economic minister says the country will default on its debt.

Minister Axel Kicillof said Wednesday the South American country failed to reach agreement with several New York hedge funds before a midnight deadline. He said Argentina “had negotiated in good faith.”

The hedge funds sued, demanding full repayment of their $1.5 billion share of the Argentine debt.

As Argentina’s delegation scrambled in negotiations at a New York office for a last-minute deal, the price of Argentina bonds surged 15 percent to levels not seen in more than three years.

The move higher came as U.S. ratings agency Standard & Poor's downgraded Argentina's credit rating.

This marks the second time in 13 years Argentina has defaulted on its debt.

The country moved money to a New York bank to make the scheduled debt payment, but a federal judge would not allow the country to pay only those bondholders who agreed to its debt restructuring.

Argentina officials said that means they have only partially defaulted.

The downgrade from S&P will require the country to repay some debt early.

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Comment Sorting
by: lone eagle from: Bangkok, Thailand
August 01, 2014 12:16 AM
In the 2012 book "Why Nations Fail" the authors devote about 30 pages to Argentina with this statement that summarizes it all: "Since independence,Argentina has suffered from most of the institutional problems that have plagued Latin America. It has been trapped in a vicious, not virtuous cycle."

According to the Wikipedia subject "Corruption in Argentina"
"Corruption remains a serious problem in the public and private sector even though the legal and institutional framework combating corruption is strong in Argentina...........In 2013, Argentina was ranked 106th out of 177 countries in Transparency International's Corruption Perceptions Index, a ranking it shared with Bolivia, Gabon, Mexico, and Niger. According to the Index, Argentina, along with Mexico, was the most corrupt country in Latin America."
Meanwhile in the United States in Virginia a former governor and his wife are on trial for corruption, and a sitting governor in New York is being castigated by a major American newspaper, the public, and a US Attorney for prematurely shutting down an investigation that he established to investigate corruption in his own government. If Argentina is serious about resolving its financial problems it needs to clean up the country's corruption and reform its political and economic institutions.

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