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ARGENTINA-ECONOMY-DEBT-INFLATION
Argentina is in ‘virtual default’ says president
BUENOS AIRES, Dec 23, 2019 (BSS/AFP) – Argentina’s President Alberto
Fernandez said Sunday the South American country is in virtual default and
compared the situation with the 2001 crisis — the worst in its recent
history.
The country is in recession and has suffered 18 months of economic crisis
sparked by a currency crash. Its economy is expected to shrink by 3.1 percent
in 2019.
“It is not the same as 2001, but it is similar. At that time poverty was at
57 percent, today we have 41 percent poor people; then we had a debt default,
today we are in virtual default,” Fernandez said in an interview with TV
program La Cornice.
The center-left president came to power on December 10 after defeating
liberal Mauricio Macri in the presidential election, and has previously
expressed his willingness to pay creditors.
But on Friday the government unilaterally postponed until August paying
some 9 billion dollars in maturities, which resulted in the country’s debt
being downgraded by rating agencies Fitch and S&P, who consider it in
selective default.
“This is what we inherited. We cannot face this by paying the obligations
that are falling. We used to have high unemployment, and today we have the
same,” Fernandez said, drawing a comparison with the 2001 crisis when
Argentina defaulted on $100 billion.
“What we did not have is the inflationary process that we have now.”
The president obtained political support from Congress on Saturday with the
approval of an economic emergency law that will take effect on Monday.
It includes increasing taxes on the upper and middle classes, improving
benefits for the most deprived sectors, and imposing a 30 percent tax on
buying and selling currencies.
Fernandez maintained the monthly $200 limit of buying foreign currency
imposed by Macri last August, noting American dollars are now scarce in
Argentina — and expensive.
“We have to end this practice of saving in dollars,” he said, referring to
the historical habit of Argentines, who buy the dollar as a refuge currency
against the country’s inflation.
Argentina has an annual inflation of 55 percent, and a debt of almost 90
percent of its GDP.
BSS/AFP/RY/1600 hrs