2024-01-10 14:45:00
The former Minister of Economy Martín Guzmán pointed out on his social networkss of key aspectss of the Omnibus Law that, if approved, would be “highly harmful to the future of the country”, among them the modification of the Financial Administration Law qthat according to their view would enable “mega-swaps” of debt like the one in 2001, and the repeal of Article 1 of the Law to Strengthen the Sustainability of Public Debt, which would allow Congress to not even need approval for that
At the end of last December The former head of the Treasury had already harshly criticized President Javier Milei’s project by expressing: “You are opening the door to new looting”, precisely due to the fact that that would enable the Executive to take on debt without limits.
Martín Guzmán on the steps of Javier Milei: “Dollarization has already begun”
Now, returned to the charge when rescuing the sayings of the deputy Itai Hagmanand again referred to the modification of the Financial Administration Law and the repeal of Article 1 of the Law to Strengthen the Sustainability of Public Debt, which requires that debt in the form of public securities in foreign currency under foreign law must be authorized by the National Congress.
Deputy @ItaiHagman marks two aspects proposed by the president’s Omnibus law @JMilei that would be highly harmful for the future of the country.
The first is the modification of the Financial Administration Law, which stipulates that a public debt restructuring must… https://t.co/NnNRGoc8jB
— Martín Guzmán (@Martin_M_Guzman) January 10, 2024
It is worth considering that the economist Itati Hagman, Representative of the Nation for Unión por la Patria spoke yesterday on the first day of debate for the Omnibus Law and, among other things, pointed out that, With this law the government wants “an Amnesty for Sturzenegger and enable another mega-swap like the one in 2001.”
They want an Amnesty for Sturzenegger and enable another mega-swap like the one in 2001. pic.twitter.com/1M0ycmS90K
— Itai Hagman (@ItaiHagman) January 10, 2024
The first aspect
When referring to the modification of the Financial Administration Law, Guzmán pointed out that “it stipulates that a restructuring of public debt must result in an improvement in the amounts, terms and/or interests of the original operations (and that it has been interpreted as requiring improvements in two of those three dimensions).
“What the law requires is quite simple,” argued the former minister, and continued: “If you are going to restructure the debt because it is unpayable, make sure you owe less and not more. With the change proposed by Milei’s law, it would no longer be necessary for this to happen. What the project stipulates in its Chapter IV Article 16 is that a debt exchange should address “the prevailing conditions of the financial market,” he said.
Caputo offered the banks the largest debt exchange in Argentine history
For the economist this means that, “If it turns out that the country has no way of paying off its debt without sinking, the Government could exchange that debt for another that implies owing more.” And along those lines he added: “Let’s think a little: it turns out that a restructuring is only necessary when the prevailing conditions of the financial market are such that sustainable debt refinancing is impossible, so It is ABSURD to refer to the conditions prevailing in the market in such circumstances as a guide to issue new debt securities.“, he pointed.
And he agreed with Representative Hagman’s view. which he presented the previous day on the first day of debate in commissions of the Omnibus Law. For Guzmán, this change in the law, “more than an unconscious nonsense, it actually seems to be an amnesty in the face of the history of those who in 2001a tragic year for Argentina, they made a debt swap that instead of reducing it increased it,” he said.
The second aspect
On the other hand, the former head of the Treasury referred to the repeal (in its Article 107), of Article 1 of the Law to Strengthen the Sustainability of Public Debt, and known as ‘Guzmán Law’, which requires that indebtedness in the form of public securities in foreign currency under foreign law must be authorized by the National Congress.
“This closes the circle,” said Guzmán.
“The first change would enable “mega-swaps” of debt like the one in 2001where debt maturities are extended, increasing the principal owed and interest, and the second allows you to not even need Congressional approval for this. “This doesn’t seem very anti-caste and pro-people, right?” questioned the former Minister of Economy.
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