August 22, 2019 / 2:12 PM / 2 months ago

Argentina presidential front-runner Fernandez pledges 'no default' if elected

BUENOS AIRES (Reuters) - Argentine presidential candidate Alberto Fernandez said on Thursday there was “no possibility” the country would default on its debt if he were elected in October, but that the government would have to negotiate new terms with creditors due to the weak economy.

FILE PHOTO: Presidential candidate Alberto Fernandez speaks during the primary elections, at a cultural centre in Buenos Aires, Argentina, August 11, 2019. REUTERS/Agustin Marcarian/File Photo

Fernandez is expected to win Argentina’s Oct. 27 presidential election after his resounding lead over President Mauricio Macri in the Aug. 11 primary vote.

“No one wants default as an exit,” Fernandez said at a seminar hosted by local newspaper Clarin.

“We will have to talk with the creditors to see how we can resolve the situation, because if Argentina has to pay its obligations under present conditions, that will be hard to do,” Fernandez said.

On Wednesday, two of his economic advisers met with the country’s new treasury minister, Hernan Lacunza, and told him Fernandez would seek an “alternative economic model” to the current administration’s policies.

Center-left Peronist Fernandez has been critical of last year’s massive $57-billion standby agreement with the International Monetary Fund (IMF) and the austerity measures it imposed. He has pledged to “rework” it if elected.

Macri said at the same event on Thursday that an IMF team would arrive in Argentina next week to prepare a review of the economy under the loan deal. He went to the fund for help when a spate of peso weakness ignited default worries in mid-2018.

He put a brave face on the recession- and inflation-racked economy. “We have not solved all the problems, but we are much closer now to fiscal equilibrium,” Macri said. The IMF deal calls on Argentina to erase its primary fiscal deficit this year.

Argentina’s peso closed 0.19% weaker at 55.135 per dollar, without any help from the central bank, which had sold dollar reserves in the foreign exchange market for six straight days through Tuesday as part of its effort to stabilise the currency.

The currency fell by nearly 18% last week amid fears of a return to the interventionist economic policies of former President Cristina Fernandez de Kirchner, Fernandez’s vice presidential candidate.

Fernandez, who has said he will not be answerable to Kirchner, also said he was not opposed to an historic trade pact agreed between the Mercosur bloc and the European Union in June, but there were a “series of points” that needed analysis.

“I will analyse them in a way that guarantees that no agreement we sign with the EU or with any other market will end up affecting our production,” Fernandez said.

Reporting by Cassandra Garrison and Eliana Raszewski; Editing by Hugh Bronstein and Rosalba O'Brien

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