Zapatero to support Argentine recovery plan

26th January 2005, Comments 0 comments

26 Madrid 2005, BUENOS AIRES- Spanish Prime Minister Jose Luis Rodriguez Zapatero pledged his government will continue to back Argentina as the South American nation negotiates with international institutions and creditors in a bid to regain access to global financial markets.

26 Madrid 2005

BUENOS AIRES- Spanish Prime Minister Jose Luis Rodriguez Zapatero pledged his government will continue to back Argentina as the South American nation negotiates with international institutions and creditors in a bid to regain access to global financial markets.

Zapatero made the commitment at a joint appearance with Argentine President Nestor Kirchner to sign an agreement expanding the two countries' "strategic partnership."

The Spanish premier, who arrived in Argentina from Brazil on his first Latin American tour since taking office last April, said the big Spanish firms that established a presence in Argentina during the 1990s remain committed to the country.

He said they could now expand their operations with confidence thanks to Kirchner's pledge to reinforce juridical security for foreign investors.

Zapatero also praised the Argentine government's efforts to emerge "with intelligence" from the economic crisis that followed its December 2001 default on some USD 82 billion in obligations to private foreign creditors.

Zapatero said Madrid will continue to back Argentina in its often difficult talks with institutions such as the IMF and in its attempts to reschedule the delinquent debt.

"We will do what's in our power to bring to a good conclusion the negotiations that will be renewed with the International Monetary Fund in the coming months," the Spanish prime minister said.

Buenos Aires is in the middle of a campaign to persuade global investors to accept drastic terms on unpaid debt resulting from the biggest sovereign default in history.

The Argentine proposition involves payment of about 25 cents on each dollar owed, an offer that has evoked bitter complaints from bondholders.

In late 2001, a virtual meltdown of the Argentine financial system turned a three-year recession into a full-blown depression, pushing unemployment above 20 percent and leaving more than half the population below the poverty line.

Argentina's economy contracted by one-fifth between 1998 and 2002, forcing the country to default on USD 100 billion in debts to private creditors in December 2001.

Under Kirchner, who took office in May 2003, Buenos Aires has done much to curb its budget deficit and adopt more-or-less orthodox macroeconomic policies.

In fact, Tuesday brought an announcement that 2004 saw Argentina's biggest-ever budget surplus.

At the same time, the Argentine leader has refused to implement some of the structural reforms demanded by the IMF, contending they would impose too much additional hardship on people hit hard by the 2002 depression.

Kirchner has played up the political significance of the Spaniard's visit and the importance of the accord they signed to deepen the bilateral relationship.

Discussing his own economic policies, the Argentine president said he had chosen "the hardest path" by opting for what he characterized as a sustainable debt restructuring instead of a "deceptive and false restructuring meant to play for time without complying."

Kirchner sought to distinguish his administration's approach from that of his predecessors, notably Carlos Menem, whose 1989-99 tenure was marked by a boom that was followed by severe bust in the early part of this decade.

"We haven't formed partnerships on the basis of promising easy profits, but rather we try to comply with agreements according to our capabilities," Kirchner said.

[Copyright EFE with Expatica]

Subject: Spanish news

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