Argentina awoke on Thursday to uncertainty. Some sectors of the local media boldly announced the country was in default.
Others said the reality was somewhat different.
Stock drops in Argentina as default fuels uncertaintyArgentina awoke on Thursday to uncertainty. Some sectors of the local media boldly announced the country was in default. Others said the reality was somewhat different.
In his morning address, the cabinet chief Jorge Capitanich dismissed the idea that the government had entered default.
“They try to say that the Argentine republic is in a supposed technical default which is an absurd lie that tries to block the process of restructuring. Argentina paid up and Argentina has fulfilled all its commitments from its contracts.”
People are still unsure about quite what to call this situation. In social networks some have coined a new phrase for it — a pun on the surname of the judge who is overseeing this case, Griesa, and default — they are calling this the ‘Griefault.’
Wednesday night’s failure to reach an agreement between the Argentine government and the holdout hedge funds led to a new phase in this legal standoff. Ratings agencies declared Argentina in selective default. But Argentina said it would stand firm.
Axel Kiciloff, Argentina’s Finance Minister, said, “What will we do first, like I said, we won’t sign any pledge that compromises the future of Argentinians. We’re defending the Argentine people.”
The current situation is a far cry from Argentina’s most recent default in 2001. Thirteen years ago, 38 people were killed in protests, GDP fell by 11 percent, savings in dollars were transferred to pesos-and the peso lost 70 percent of its value.
As the dust settles and negotiations work towards an agreement, whatever the correct and precise term for this situation is, what is certain is this only adds pressure on an Argentine economy in recession and with high inflation.
For more on this issue, CCTV America spoke to Alberto J. Bernal-Leon, the Head of Research And Partner at Bulltick Capital Markets.