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Argentinas Foreign Debt Restructuring - Essay Example

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This paper “Argentina’s Foreign Debt Restructuring” analyzes the causes and effects of the actions of the political leaders that left to the situation and the circumstances under which the various classes of creditors were forced to accept the proposals put forth by the Argentine president…
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Argentinas Foreign Debt Restructuring
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"Argentinas Foreign Debt Restructuring"

Download file to see previous pages Conversely, the "legal" definition of foreign debt is debt issued according to foreign (New York, UK, et cetera) law, regardless of whether it is in local or foreign currency and regardless of who, foreign or domestic resident, is holding these claims."

Debt Renegotiation - a Background:

Argentina bogged down by its mounting external debts decided to settle all the foreign currency public debt by replacing the debts with new securities calculating at the rate of 35 cents per every dollar of debt. The government also decided to repudiate all the past interest due on those debts. The government also announced that those bondholders who do accept the government's proposal by the deadline will not be paid anything. Though the announcement of the settlement of the debts in this way is criticized vehemently by the bondholders the government announced that by the deadline more than 75 percent of the country's creditors accepted the proposal. However the Institute of International Finance observed that such an aggressive conduct by the government of Argentina was sure to affect its long term economic growth and stability. The Institute also commented on the lack of progress on the implementation of the structural reforms to boost the economic development.

Debt Management of the Governments:

It so happens in most of the countries the government becomes the largest single borrower of the country. The effectiveness of the debt management largely influences the development of the domestic capital market. The debt management also reflects on the fiscal policies of the country and the spread of the respective countries government bonds in the US and other treasuries world over by affecting the market prices and tradability of the bonds. The...
The government also announced that those bondholders who do accept the government’s proposal by the deadline will not be paid anything. Though the announcement of the settlement of the debts in this way is criticized vehemently by the bondholders the government announced that by the deadline more than 75 percent of the country’s creditors accepted the proposal. However the Institute of International Finance observed that such an aggressive conduct by the government of Argentina was sure to affect its long term economic growth and stability. The Institute also commented on the lack of progress on the implementation of the structural reforms to boost the economic development.

Debt Management of the Governments:

It so happens in most of the countries the government becomes the largest single borrower of the country. The effectiveness of the debt management largely influences the development of the domestic capital market. The debt management also reflects on the fiscal policies of the country and the spread of the respective countries government bonds in the US and other treasuries world over by affecting the market prices and tradability of the bonds. The debt management policies of the government will have a strategic implication on the growth and development of the economy as a whole. A good debt management of any country should reflect in the reduction of the borrowing costs, greater access to the capital markets of international standing. ...Download file to see next pagesRead More
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