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Transcript
Eighth UNCTAD Debt Management Conference
Geneva, 14 - 16 November 2011
Principles for Promoting
Responsible Sovereign Lending
and Borrowing
by
H.E. Mr. Hernán Lorenzino
Secretary of Finance
the Argentine Republic
The views expressed are those of the author and do not necessarily reflect the views of UNCTAD
VIII Debt Management Conference
PRINCIPLES FOR PROMOTING
RESPONSIBLE SOVEREIGN LENDING
AND BORROWING
The Argentinean perspective
Hernán Lorenzino
Secretary of Finance of the Republic of Argentina
Geneva, November 2011
The Argentinean experience
• Situation that led to the default – Spiraling debt burden and default over
USD 82 Bn of bonded debt
Gross
Public
Debt
of GDP )
Gross
Public
Debt
(%(%GDP)
160
140
% of GDP using 2004's Real FX from 1990 on
120
% of GDP with actual Nominal FX
100
80
60
Currency Board
Period
40
20
0
70
72
74
76
78
80
82
84
86
88
90
92
94
96
98
00
02
04
• During the currency board regime (’91-’01), the “debt problem” was hidden by full access to
debt markets and an artificially low FX.
The Argentinean experience
• Situation that led to the default – Maturities concentrated in the short term
Debt maturity profile prior to the default
20
8%
18
T-notes
16
Loans
14
Bonded debt
% GDP
US$ Bn
(capital, Mn US$, % GDP2001)
Debt composition by currency
prior to the default US$ 128 Bn
6%
"Services to GDP"
12
AR Peso, 4%
Other
currencies, 7%
10
4%
Euro, 20%
8
6
2%
4
US Dollar, 68%
2
0
0%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
• Half of debt maturing within 3 years.
• 88% of debt services (k+i) maturing in 5 years.
• A decade of BoP structural deficit.
• Financial markets closed for new Argentine financing.
• 96% of total debt denominated in foreign currency.
• 93% of total debt held by private creditors and IFIs.
NO ACCESS TO NEW FUNDING
+
DEEP ECONOMIC RECESSION
=
INEVITABLE DEFAULT
The Argentinean experience
• Economic indicators
GDP (Bn USD)
Ave. Exchange Rate (ARP/US$)
Imports (% GDP)
Investment (% GDP)
International Reserves (% GDP)
Total Deposits (Bn USD)
1998
2002
2010
2011P
299
1,00
13%
20%
18
77
101 (-66%)
3,09 (+209%)
13% (0%)
12% (-40%)
11 (-39%)
26 (-64%)
369
3,91
18%
23%
50
87
429
4,13
20%
22%
48
103
• Social indicators
GDP per capita (USD)
Unemployment
Poverty
Extreme Poverty
1998
8.300
13%
25%
6%
2002
2.700 (-67%)
20% (+54%)
52% (0%)
24% (+300%)
2010
9.100
8%
12%
3%
2011P
10.500
7%
8%
2%
The Argentinean experience - Debt exchanges
2005
2010
• Par
• Discount
• Cuasi-Par
• GDP warrants
• Par
• Discount
• GDP warrants
Payment of PDI*
In cash to all holders
In cash for the Par option
and Global 17 for the
Discount option
Commissions
Charged to the Republic
Charged to the holder
Marketability of
the issuance
New instruments
Liquid secondary market
Macroeconomic
context
Recovering from the crisis
High & stable 7-year
growth track-record
Securities
Offered
*Recognized from 12/31/2003
The Argentinean experience
Gross Debt, Net Debt, External Debt & International Reserves
(all as % of GDP)
166%
160%
164%
Public debt / GDP
140%
Net debt / GDP
120%
100%
External debt / GDP
95%
IR / GDP
80%
60%
46.3%
40%
20%
23%
17%
14%
11%
0%
Dec-02
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Mar-11
• Sustained downward trend in external debt as a consequence of a sustained GDP
growth and a significant improvement in the debt composition.
THANK YOU