Argentina 'virtually' in default, Fernandez says

BUENOS AIRES, Argentina - The front-runner in Argentina's presidential race, Alberto Fernandez, said the country is "virtually" in default and should renegotiate its bailout loan agreement with the International Monetary Fund, or IMF.

Fernandez, a Peronist whose running mate is former president Cristina Kirchner, trounced Argentine President Mauricio Macri by a wide margin in bellwether primary elections held from Aug 11.

The shock result sent financial markets into a tailspin, prompting Macri to promise salary hikes and tax cuts.

On Saturday, Argentine Finance Minister Nicolas Dujovne resigned in the wake of the debacle and was replaced by Hernan Lacunza, a respected economist with broad political ties.

Dujovne said he was "convinced that, under the circumstances, the (government's) management needs significant renewal in the economic arena".

Fernandez, now the clear favorite to win upcoming presidential elections on Oct 27, laid out his views of the economic situation in a series of newspaper interviews over the weekend.

"I would say there is a sole incontrovertible reality and that is that Argentina under these circumstance is unable to meet the obligations it assumed," he told the Clarin newspaper.

"We have to understand that we are virtually in conditions of a default, and that is why Argentine bonds are worth what they are worth, because the world realizes that it can't pay," he said.

Macri negotiated a $56-billion bailout from the IMF in 2018 to steady turmoil in the currency market, but after last week's election rout, the peso plunged 20 percent and Argentine stocks lost 30 percent.

Fernandez pointed to Argentina's debt default in 2001 as an example of how to handle the current situation.

"Argentina should fulfill its obligations," he said. But he recalled that after the last default, the country negotiated with its creditors "one by one".

"We have to sit down to discuss it one by one, as we did with the debt at that time. Remember that we asked bond holders to accept a 75 percent discount."

Fernandez said in an interview: "The only apparent solution is to postpone the dates" when debt payments are due.

Fernandez also appeared to put in doubt a trade deal reached recently between the European Union and the South American trading bloc Mercosur, of which Argentina is a member along with Brazil, Paraguay and Uruguay.

"The treaty does not exist," he said. "What exists is a series of points to be agreed which will require two years of negotiations."

"What I am going to do with the agreement ...(is) take it up, study it, try to extract the best advantages for Argentina."

Agence France-presse

(China Daily 08/20/2019 page12)