The Minister of Economy and Public Finance of Argentina, Axel Kicillof, made a presentation on April 17, 2015 at the meeting of G24 Ministers, in the framework of the Spring Meetings of the IMF and the World Bank. Before his peers, he thanked the renewed support for Argentina in the battle with the vulture funds and stressed the need for development banks to dismiss the assessments made by private credit rating agencies when analyzing credit lines.

In this regard, Kicillof expressed his concern regarding the new criteria used by development banks to carry out portfolio analysis and evaluate the lending capacity to each country, according to the criteria used by private credit rating companies, similar to the private commercial banks.

Therefore, the Minister requested the creation of a G24 line of work on development banks and the danger of them using the methods applied by private credit rating companies. Kicillof recalled that S&P had rated Leman Brothers as AAA before it plummeted, and “during the 2001 default, they gave Argentina a much higher rating than during these past 12 years. The market ends up with a better assessment about Argentina than the credit rating agencies.”

“When subjective ratings are applied, we face two risks,” warned Kicillof and explained “first, the fact that they are preferential creditors is not taken into account; and second, banks would cease having a development goal and a countercyclical role. They are a threat to the role played by development banks and to financing infrastructure.”

Moreover, the G77 bloc called for a mechanism that ensures that what happened to Argentina regarding debt restructuring does not happen again, as it is a situation that could happen to many countries at any given time.

Lastly, the G24 meeting official communiqué expresses the international support to Argentina’s position: “In order to address incentives for holdout behavior that seriously undermines sovereign debt restructuring processes, we welcome the progress made in the work to strengthen the contractual framework for debt issuance, in particular regarding the reformed pari passu and collective action clauses,” states the communiqué.

The G24 is an intergovernmental forum that seeks to coordinate the positions of 24 developing countries in Africa, Latin America and the Caribbean, Middle East and Asia on international monetary and finance issues. The President of the World Bank, the Managing Director of the IMF, and representatives from the UN, ECLAC and UNCTAD also attend these meetings.
After this event, the Minister’s agenda also included a bilateral meeting with the Secretary General of the United Nations Conference on Trade and Development (UNCTAD), Mukhisa Kituyi, in which the Ambassador of Argentina to the U.S., Cecilia Nahón and Carlos Bianco, Secretary of International Economic Affairs, were also present.

At this meeting, they discussed what the next steps should be in the battle against the speculative actions of the vulture funds, and the search for negotiation mechanisms that respect the sovereignty of each country.In turn, Kicillof and Kituyi agreed that the United Nations is the right place to create a multilateral framework for sovereign debt restructuring.