Page 11 - MONTT GROUP LATIN AMERICAN MAGAZINE JANUARY, 2020(Ingles) .pdf

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What Caused the Argentine Debt In ation Crisis
Law to Restructure Debt
Hence, the new Government continues to prepare a soft landing, for which, together with achieving the recent approval of the Economic Emergency Law, the Executive now sent to Congress a bill to restructure its public debt, while asking for “time” and “good faith” to its creditors, including the International Monetary Fund (IMF).
The new initiative seeks to improve the country at least two of the following three conditions: terms, interest rates and amount of capital. Among other points, the bill authorizes the Executive to carry out the operations of administration of liabilities and / or exchanges and / or restructuring of interest maturity and capital amortization services of public securities issued under foreign law.
Upon assuming the presidency on December 10, Alberto Fernandez inherited a public debt of USD $335,000 million, equivalent to over 93 percent of GDP. That debt includes a loan for USD $ 44,000 million from the IMF. “Argentina’s conversations with the international organization have been taking place in a constructive tone,” said Economy Minister Martín Guzman, stressing that the country faces a very high capital amortization charge for 2021, 2022 and 2023.
However, he said, the county will not accept “any conditionality” by the agency, estimating that the program designed with the previous Government “was a resounding failure.”
That credit was the largest delivered to any country by the international organization in its history, thanks to the authorization of the then highest authority, Christine Lagarde, today president of the European Central Bank, to the point that many estimate that Argentina will be what will mark the management of the new IMF director, the Bulgarian, Kristalina Georgieva. And this is because everyone agrees that the Fund lost with this loan, since four out of every 10 dollars destined for rescue plans are in Buenos Aires today.
Experts fear for the future of the IMF and its credibility and describe Lagarde’s action as “a wild bet over a Government that was not more than 18 months old.” On the other hand, the researcher and author of “History of the Relations between Argentina and the International Monetary Fund”, Pablo Nemiña, points out that: “The IMF is resilient and used to failure. It failed in Argentina, although it has mechanisms to process it,” but he agrees that the economic consequences were very negative. And he adds that: “Since the last Government did not put capital control, the few dollars that escaped are in the hands of private investors. The only novelty was the social containment networks, which prevented a social outbreak.”
At the same time, the Argentine Government announced that it will send to Congress a bill that establishes a new regulatory framework for the hydrocarbons sector, conventional and unconventional. Industry sources a irmed that the initiative would include a guarantee of access to dollars, tax bene ts for the repatriation of dividends, accelerated amortization of capital and
the possibility of being able to protect the funds in an overseas trust. On the other hand, the standard would include stability for investors, that is, that they be protected against possible regulatory changes.
Judicial Reform
In another order of things, it was announced that the Executive is preparing an ambitious and profound Judicial Reform that will be sent to Congress in the next few weeks. This initiative is expected to change the system for selecting judges; give greater transparency to the scheme of cause draws; the federal criminal and investigative jurisdictions will be merged; greater powers of investigation will be granted to prosecutors in drug tra icking cases and it is hoped that the Federal Intelligence Agency will not participate in judicial investigations.
The most important aspects are:
• Independent Intelligence: The President is convinced that intelligence must avoid participating in judicial cases. Thus, a more transparent system of treatment of this agency is studied as an auxiliary of Justice. This would also include the publication of expenses of the entity and the organization chart of those responsible for carrying out investigations requested by the courts. During his inaugural management speech at the Congress, the Head of State was blunt at that point: “Never again should Argentina have justice contaminated by services, judicial operators and obscure procedures.”
• Enlargement of Courts: The Government’s idea is to multiply the 12 federal courts and establish a kind of merger of federal criminal and correctional, ordinary criminal and economic criminal jurisdictions to discourage the concentration of cases in the hands of a few judges. It is not clear yet how many new courts are being created, but conceptually, the idea is to give them “greater transparency to a corrupt system,” as de ned by a government o icial in relation to the current federal courts.
• Lotteries: The other issue that would include the Judicial Reform bill would be the establishment of a more transparent system of ra les. The Government maintains that the current scheme for appointing judges is “archaic and not very transparent”. In the opposition they suspect that the vulnerabilities of this mechanism allowed certain complaints to always fall into the same hands.
• Power of the Prosecutors: The Government’s project will also aim to give prosecutors greater investigation power in the fight against drug trafficking and money laundering investigations. It is also analysed to increase the personnel of the prosecutors and appoint auxiliary prosecutors.
On the other hand, the elaboration of the project for the reform of the special retirement systems of judges and diplomats also progresses in the o icial offices. Today the parties try to agree positions to reach a satisfactory project.
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