The Paris Club group of rich countries has announced, Thursday, it has reached an agreement for Argentina to begin repaying up to $9.7 billion, double the size of the original debt.
Argentina had to stop making debt payments in late-2001 as a result of an economic crisis brought about by following IMF economic policy conditions. Argentina subsequently reached an agreement with most of its private lenders to pay 33 cents in every dollar owed. However, the Paris Club group of countries has refused to negotiate a debt reduction unless Argentina once again followed IMF economic conditions, something Argentine governments have refused to do.
An agreement has now been reached for sixteen countries, including Japan, Germany, the Netherlands and UK, to be repaid $9.7 billion over coming years, more than double the $4.7 billion of debt owed when it was defaulted on.
Tim Jones, Policy Officer at Jubilee Debt Campaign, said:
â€œIt is unfair for the Paris Club countries to be demanding huge amounts more from Argentina than received by private lenders. Countries such as Japan, Germany and the UK lent money to previous Argentine governments recklessly. There is no reason why they should be paid in full.â€
â€œRich countries have condemned the profiteering of so-called vulture funds in debt crises around the world, but this is vulture-like behaviour from the Paris Club themselves. Trying to double their money from Argentinaâ€™s default after private lenders accepted a two-thirds write-down is extraordinary hypocrisy.â€
The UK claims it is owed $119 million. Of this, Vince Cableâ€™s UK Export Finance has admitted 38% of the debt comes from loans to the Argentine military junta in the 1970s to buy military equipment. This included naval destroyers, helicopters and missiles, which were later used to invade the Falkland Islands. The existence of responsible lending rules could have prevented such a counter-productive loan from taking place.
Tim Jones, continued:
â€œThe Argentine people should not have to pay for dodgy deals between the UK government and the long gone military junta. UK funding for an oppressive military dictatorship was wrong, and Vince Cable should cancel the debt.â€