COC

rbw/debt-relief-campaigners-decry-argentina’s-payment-holdout-creditors

Debt relief campaigners decry Argentina’s payment to holdout creditors

Rethinking Bretton Woods | Mon, Mar 14, 2016

Argentina’s agreement in principle to pay out claims to creditors that had stayed out of the sovereign debt restructurings of 2005 and 2010 triggered widespread expressions of concern from debt justice advocates.

“The settlement validates a predatory and exploitative business model,” said Eric LeCompte, Director of Jubilee USA network. According to a spokesperson from the European Network on Debt and Development,  “Now Argentina needs to borrow even more money to pay the vultures – a huge sum for a country struggling to finance many essential services. This disgraceful situation is allowed because no insolvency regime exists that can enforce all creditors’ participation." In a statement, the Latin American Network on Debt, Development and Rights said “From leading a worldwide struggle against illicit financial flows and the pirate economy of vulture funds . . . [Argentina] is now sitting at the table with the vultures, renegotiating a payment of a debt that had already been acknowledged as illegitimate.” The deal “will increase moral hazard and encourage disruptive hold-out litigation worldwide,” said the UN Independent Expert on Foreign Debt and Human Rights, warning of the negative human rights consequences of such actions.

RBW Project Director Aldo Caliari said “It is a sad day for those seeking a fairer approach to handling  sovereign debt crises. At the same time, the senselessness of how Argentina’s saga played out has helped galvanize opinion that a sovereign debt workout mechanism is urgently needed.”