kicillof and vanoli attend imf and world bank annual summit

Friday, October 10, 2014

G24 expresses concern over ‘systemic impact’ of Griesa’s ruling

Economy Minister Axel Kicillof speaks yesterday at a Council of the Americas event in Washington.

The Group of 24 (G24) expressed its “concerns” yesterday over the “systemic impact” that US District Judge Thomas Griesa’s ruling in favour of the “vulture funds” could have on the international financial system and specifically on sovereign debt restructurings.

Meanwhile, in Washington to attend the annual summit of the IMF and the World Bank, Economy Minister Axel Kicillof and Central Bank Governor Alejandro Vanoli criticized IMF’s World Economic Outlook report, which estimated Argentina’s economy output will fall 1.7 percent this year and 1.5 percent in 2015.

The G24, which was established in 1971 to coordinate the positions of developing countries on international monetary and development finance issues, said that “recent events” on the Argentine case “showed the importance of having more efficient mechanisms to solve sovereign debt crises.”

At the same time, the group expressed “concerns” over Griesa’s ruling due to the “possibility of encouraging in the holdouts a behaviour that affects the basic architecture of sovereign loans and the resolution of sovereign debt.”

The G24 also said it “took note” of the beginning of discussions in the United Nations “to establish a multilateral mechanism for the restructuring of sovereign debt” and said “it hoped that the dialogue and actions continue” to create this mechanism.

Kicillof and Vanoli attended a meeting of ministers and governors at G24 headquarters in Washington and then gave a presentation at an event organized by the Council of Americas and the Argentine Embassy about Argentina’s long-term legal battle with the holdouts. Both expressed concern about future debt restructurings.

“This issue represents a concern for all the countries because of the systemic repercussions it will have. If the criteria applied by the New York Court is enforced, it will be impossible to carry out a debt restructuring and speculative behaviour will become the norm,” Kicillof said. “There’s a huge consensus about the weakness of the recovery of the world economy and that leads to many concerns about inequality among countries.”

Kicillof also said the IMF’s estimates are “too pessimistic and biased” and asked the Fund to review them, while he backed the federal government’s widely questioned economic projections.

“Fiscal policies applied by the federal government since the beginning of the year and the wage negotiations agreed on with the different unions make us think that the IMF’s estimations are too pessimistic,” Kicillof said.

As it has previously noted, the IMF agreed yesterday with the G-24 and said Argentina’s legal conflict will set a “precedent” for the international financial system and expressed its concerns over the consequences of Griesa’s ruling.

Herald with Télam, DyN