Article Summaries

by Alexander Lindee

by: S. Karene Witcher and Roger Lowenstein

from: Wall Street Journal - 6/21/84

Of the $450 million in back interest that Argentina has right now, yesterday they finally made a payment of $100 million to the foreign creditor banks. But this still leaves $350 million that in 9 days on June 30 will be 90 days overdue. The announcement of the payment was made by Citibank, the bank that heads the 11-bank committee that is negotiating with Argentina on matters of the countries $43 billion foreign debt.

In Cartagena, Colombia, foreign ministers from 11 different Latin American countries - Argentina included - will meet to talk about the region’s worsening debt problems. What these countries are trying to achieve is more support from the governments of creditor countries and possibly from international lending agencies, such as the World Bank. In addition to that these countries will ask for lower interest rates from foreign banks to go along with a reduction of trade barriers from industrialized countries.

The United States is paying great attention to Argentina specifically and their continuous talks with the 11-bank committee about the remaining $350 million that they still owe by June 30. If the money is not paid by the end of second quarter (June 30) then almost all U.S. banks will have to classify some of their Argentine loans as “non-accrual” and the income already recorded on the interest that the money would have earned will have to be subtracted from quarterly earnings.

In March four Latin American countries - Brazil, Colombia, Mexico, and Venezuela - put together a financial rescue package of $300 million because Argentina had problems paying overdue bank interest. The U.S. Treasury initially agreed with these four countries that it would reimburse them for their involvement with this rescue package as long as Argentina reached an agreement with the International Monetary Fund on an austerity program. But last Friday, the Treasury dropped their commitment, because of a rejection by Argentina earlier this month on some proposal’s given to them by the IMF, and not only did they reject the proposal but they submitted in their own economic recovery package.

The Reagan administration believes that an agreement will not be able to reached by June 30, jeopardizing Argentina’s ability to repay the remaining amount of $350 million by that deadline.