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Translation and subtitles: Cristhian Bourlot Good Evevening to everyone
Translation and subtitles: Cristhian Bourlot Last Friday the Court of Appeal of New York City
Translation and subtitles: Cristhian Bourlot Ratified the sentence of Judge Griesa
In favour of the Vulture Funds
Which are very well konwn by the Argentine People
Because they were, precisely, the ones who impounded the fragrate "Libertad" last year
In the Ghana Republic
And for that reason we had to make use of International Law, and also we had to appeal to International Courts
To have the Fragate back, without expenditure from the Treasury
The recovery of one of Argentina's symbols
There had been a few impoundments before, on Tango 01
On embassies
...on other funds
But what we really want to talk about today, and to make it public
Not only to the public opinion of the Republic of Argentina
But also to those bond holders that have trusted in Argentina
93% of bond holders
We want to make public that this sentence of the Court of Appeal
...ignores this agreement that we have reached with the 93%
...or at least underestimate it
And also, in our humble opinion,...
It ignores the sovereign immunity that the debt restructuring has, restructuring that was achived first in 2005
...and then in 2010
Because as the National Constitution of Argentina commands
The negotiation of the external debt
...is the express power of the "Congreso de la NaciĆ³n"
...and it can be carried out only under its authorisation
Anyway, it is advisable to make a little of history as regards the origin of all this
Because, well, even though it seems to have happened a long time ago
"31st December 2001" is not very long ago
And it was then when Argentina defaulted the exact amount of US$ 81,836,000,000
I say it again: 31st December 2001
The Republic of Argentina, our country defaulted the bond debt for US$ 81,836,000,000 (eighty one billion eight hundred and thirty six million US Dollars)
The origin of this was, some 49%, that is US$ 40,363,000,000
Argentina had incurred in this debt during the Administration that spanned from 1989 to 1999
The remaining 51%, that is US$ 41,473,000,000
Which had been incurred by the Administration that spanned from 1999 until the time when the default was declared
It is imperative to know that when President Kirchner takes office in the year 2003
This problem of the debt is met. It was actually a problem that had its origin...
...on 24th March 1976, when the country began to incur in heavier and heavier debt
And to do carry trade
Getting worse during the "convertibility"
To ultimately implode on that 31st December 2001
President Kirchner had an idea which was in total opposition to that which had been supported until that time
Until then, within the "constant borrowing" the motto,...
...so to speak, was "pay in order to grow"
He claimed that it was the other way round, that it was necessary to "grow in order to pay"
Well, it was not that he wanted to play the smart guy; he had simple noticed what had happened in Argentina during the last 30 or 40 years
And it was crystal clear what had happened
It was impossible to pay unless there was growth; on the contrary, following the traditional recipe the debt was paid with more debt and the debt was ever heavier
And it meant a severe restriction on the Argentine economy
As regars education, culture, infrastructure, social welfare
Health, production development, work; well, a country as we all know...
When Nestor (Kirchner) took office, it had an unemploment rate of 25
Factories were closed
A situation that we all remember well
I remember that he (N.Kirchner) in the UN Assembly, the first Assembly that he had to be part of
That was on September 2003
He decidedly faced this issue and claimed that it was necessary that the world understood...
...that for Argentina to pay its debt it was essential for our economy to be able to grow
I will never forget what he stated:
"It is imperative that you let us grow for us to be able to pay..."
"...because the dead, they do not pay the debt"
And well, from that moment on, he changed the logic statement: "pay in order to grow"
for "grow in order to pay"
And precisely, from 2003 up to now, important payments were made
Based on two restructuring processes
In 2005, March 2005, the debt is restructured during the presidency of Nestor Kirchner
I remember clearly that was a tough, long negotiation
At one time, the first bank that took part as negotiator and eventual fiduciary
Wachovia Bank
It drew back from the ongoing negotiation, causing a severe crisis. At that time, the Minister of Economy then in office...
...offered his resignation to President Kirchner because it seemed that the attempt at resctructuring the debt had failed
And Kirchner said, "let's be confident, let's go on"
And it was decided to include the Bank of New York as a negotiator and eventual fiduciary
Which is commonly known as BoNY in the financial jargon
In the end, that first debt-swap, which was not very much trusted, but which Nestor had a lot of expectations in
76% of the sovereign debt ended up being restructured
With the biggest debt relief that can be remembered in history
Debt relief, that in order to measure its effect in the later growth of Argentina
It can be quantified as over AR$ 79,000,000,000
And for you to have an idea of what it represents, it is the total of the AUH (Child Universal Assignation)
It is the total of the over 2,000 schools that have been built during this ten years in the Republic of Argentina
And it is the total of the houses and their respective infrastructure, all the public housing
Which were built between 2003 and the present day
This shows the extent of its importance. Which was the argument for the debt relief?
During the time when we were incurring in debt, Argentina actually paid exorbitant rates in dollar currency
All around the world, rates were no more than 1% or 2%
Here, we paid rates of two digits
The key argument for that debt relief was that those who knew that they were going to a place where an exorbitant rate was paid
They were fully aware of the risk they are undertaking when they place their funds
For that reason we said that it should be joint venture, between a country that had bet on a "financial gambling"
And also on the other part, those who knew that it was impossible that that money could be paid under such conditions
It was then when the "holdout" problem was raised; they were, let's say, those who did not take part in the first debt-swap
Even though all countries have a Bankruptcy Act , our country has one,
Which states that if 66% of the creditors are in agreement, the judge can approve of the bankruptcy
It is a similar amount in the USA
In this first agreement we reached a 76% agreement among bond holders
But the problem with the "holdouts" continued, which was reasonable
Because there was a lot of people who were skeptical about Argentina, a country that had never paid its debts
We even took active participation creating, as a stronger proof of good faith,...
...what came to be called "GDP-linked bond", meaning that if Argentina grew
The creditors would receive more money, as a result of standing by and becoming a partner in the growth of Argentina
Then, during my presidency in the year 2010 we opened the swap again
And we reached a record number in the acceptance of the debt restructuring
Which is 93% of those bond holders which we owed to
There was more confidence by then; debt had already been paid, not only debt issued under foreign law but also under national law
Debt was paid in the Bank of New York and also here in our country
So we reached a 93% acceptance rate, a remarkable achievement due to the effort of the Minister of Economy,...
...who traveled around the world together with his team, the present Minister of Economy, Dr Lorezino
Precisely, to include many Italian, Japanese bond holders, that were samaller bond holders and which were left out of the first swap
We reached, I say it again, to this 93%
The sentence of the New York Court of Appeal, I think it is a little unfair with Argentina
It picks up an argumentation published in the Financial Times and states that it condemns us because Argentina is a "recalcitrant debtor"
Argentina has paid, between 2003 and 2012,...
The same Argentina that is labeled as "recalcitrant debtor"
US$ 173,733,000,000
I say that again
From 2003 up to the present day
We have paid US$ 173,733,000,000
US$ 41,044,000,000
...were paid inside our own National Public Sector, between different agencies from the Public Sector that lend money in order to finance each other
Infrastructure, to be brief, everything related to the State
US$ 81,487,000,000...
...is the amount of money we have paid to the foreign and domestic Private Sector, in dollars bond holders
And to the Multilateral Credit Organizations, among them the IMF, when we cancelled the debt
In the year 2006, to the Interamerican Bank of Development because of the loans we have been granted
To the World Bank, to the CorporaciĆ³n Argentina de Fomento:
US$ 51,201,000,000
Net gross: US$ 173,733,000,000
Rather than "recalcitrant debtors"
We are better difined as "Serial Payers"
But in addition to that, we have an extra quality:
We have done this with genuine resources
With reasources that we have obtained through Commerce Administration
And by a better administration of the State resources
Without entering the Capital Market
In the same way that, I think, we are part of the Guiness Record because of the most important sovereign debt that has been defaulted
I also think that we should be in the Guiness as the country that has paid more debt and had more obligations fulfilled
In the last 10 years without access to the Capital Market
For that reason, I consider that it is important that all the Argentinians be aware of the effort that we have all made
And it is also important that the world notice the effort made by the Argentinians
Today, the National Debt, that when Nestor (Kirchner) took office represented something like 150%
Of the GDP, has now come to represent in foreign currency, be it domestic private sector or foreign private sector,
Less than 10% of the GDP (Gross Domestic Product)
That is, from 150% of the GDP, we have come today to less than the 10% of the GDP
And in a few days time, we are going to pay BONAR 7, we are going to pay US$ 2,000,000,000 "cash"
On the 12th September, to be precise
Because the majority of them are foreign holders, and it is easy how they can receive the money
With local subsidiaries of foreign banks,...
...they pay to their other central administration where the internatonal creditors reside
And in that way the debt is cancelled out
From that moment on, that is, from 12th September onwards, Argentina will come to owe, in foreign currency -Euro or Dollar-
8,3% of its GDP
It is important to highlight that this is one of the lowest debt ratio of the developed countries
Not to mention that it is one of the lowest debt in our region.
It is worth keeping in mind that our administration is a "Serial Payer", not a "Serial debtor, debt taker"
Because the debt was taken during other administrations and also it was "defaulted" during other administrations
And this has allowed us, the Argentinians, this administration, to grow and to be able to pay the debt
Well now, earlier today I was hearing some comments on this sentence
That I dare label them a little short-lived
Because the sentence, well they say that it will have effect, it will be appealed, the Supreme Court of USA will have to make a decision in 2014
or 2015
It does not seem very serious, and it is not good governance to believe that 2014, 2015, in a short-term, it is a solution to the problems
We believe that the problems should be solved not only in the short term but also in the long term
Because of that, we have taken some steps regarding this
Since, as a country, we cannot have "a sword of Damocles" hanging over our neck when at any moment somebody is going to make a decision and the swap would become null
2005 and 2010, we won't be able to pay our creditors
and the country will go back to 2001
This is the only thing we will not allow to happen, at least as long as I am the President
For that reason, the first decision we have made is to ask God to enlighten the Supreme Court of USA
Because we would be at the doorsteps of an event that not only will nullify one of the most important debt restructuring that can be remembered of
But also will leave invalid other debt restructuring attempts
Because, you have to consider that these "vulture funds" represent only the 0.45%
To make things clear, 93% of Argentina Creditors accepted the debt swap
A 7% of them did not accept it
But only 0.45% of the bond hoders are suing Argentina in NYC, and were benefited with this sentence last Friaday
Bonds that were purchased in 2008, when they had already been defaulted
They had a very low price; and if they are granted what they expect, their profit in dollars would be over 1,300%
This is a complete nonsense and lacks common sense. I think it is not necessary to be an expert on law...
...or economy to realize that in this way not only Argentina is driven to bankruptcy but also everybody in this country
Moreover, in times when a good number of developed countries, countries from the First World are restructuring their sovereign debt
For that reason, the decision that be made by the Supreme Court of USA would affect not only Argentina
but also all the financial system worldwide
Not in vain a lot of "amicus curiare" made themselves present at court
Which are not precisely friends of Argentina, it suffices to remember the ex-IMF chairwoman Ann Krugger
A good number of Administration Funds that have also vested intrests and have made themselves present, also the Government of France
A country we are grateful to because of their being present at the US Supreme Court
But as I was saying, since we cannot afford having a sword of Damocles hanging over our heads
We have taken two more steps
Apart from this spiritual, and not at all terrenal one which is to commit ourselves to God
Firstly, tomorrow we are going to send a new Bill to the Argentinian Congress, that as the Constitution commands (art. 75), it is the only competent institution to decide over the Foreign Argentine Debt
The Executive always acts as a negotiator, as a delegate, but ultimately the contracts must be scrutinized by Congress in order to be passed or not
And this Bill is about the opening of the swap for the third time for that 7% that did not participate in previous negotiations
We want to show, once more, our strong commitment to fulfill our obligations undertaken by the Argentine Republic
Today we cannot do so, because we would be trespassing our own law that states only the 93% and the second swap was closed in 2010
Nonetheless, we are going to send, I repeat, a Bill to Congress so that the remaining 7% of bond-holders be able to be part of the debt-swap
And to be paid in the same terms as the rest of the creditors
But we have also taken the step to protect the interests of those who have trusted in our country, the 93% of bond holders
Some have been being paid since 2005, others since 2010
And it consists in replacing the bonds preserving the same currency
The same terms
Modifying only the place where the bonds are to be paid in order to avoid future impoundments on the funds, as we have already been subjected to impoundments before
To be clear, those who own Argentine Bonds, that is, 93% of the bond holders
Those bonds are going to be replaced for similar bonds
In foreign currency, with the same terms the only modification is that the place for the payment is going to be here, in Argentina
In the Central Securities Depository
We have already paid bond holders in our contry, so that you can get a picture of the legal certainty
"Boden 12", that are the bonds that Argentina issued in order to pay all those whose savings had been trapped in the "corralito"
Maybe you can recall the time when you were not allowed to take out your deposits from the banks
The Argentine government, as regards bonds issued under Argentine law and to be paid here in the Central Securities Depository,...
It has cancelled out debt that totaled US$ 19,600,000,000 entirely
Argentina paid the total amount of the confiscated savings, belonging to Argentinians and non-Argentinians, that is, from this nation and foreigners
The sum of US$ 19,600,000,000
In Bonds issued under local legislation and paid here in the Argentine Republic
In the terms and currency stipulated
And in a few days-time, on 12th September to be precise
We are going to pay another type of Bond issued, BONAR 7, for the sum of US$ 2,000,000,000
Also under local legislation and to be paid here in the Central Securities Depository
So, we have paid thousands of millions of dollars in bonds issued under local legislation
Which were paid here in Argentina
So, in that respect, the legal certainty is not only the result of our strong conviction in facing our obligations, which Argentina as a state had committed itself
Even though it was not under our Administration
But also the result of objective facts that have already been part of, paying Bonds issued here in Argentina
And our fundamental duty is not only to show an intention of payment, I know that there are social sectors that refuse to pay anything
...an absolute minority, because it would be a scandal
We must remember that Argentina has a population of 40 million people
That demand responsibility on the Government Authorities and to guarantee the growth of our country
Within the frame of legal certainty and to fulfill our obligations
For that reason, today I wanted to address not only the 40 million people of Argentina but also to all those who have trusted in our country, national or foreign private companies
They are part of that 93% of bond holders that accepted the negotiation with the "GDP-linked bond" which has already been paid
I also want to address the rest of the international financial world, and specifically to the US authorities, in particular to its Court
I want to say that a severe damage could be done onto the legal certainty, onto the "trust"
To the trust that must be part of debt restructuring
In a very difficult time all around the world as regards financial matters
We really think that a 0.45% of bond holders that could be part with "trash-bonds", acquired at a very low price
Today, they pretend to undo what we have achieved as far as debt restructuring...
...growth, payment, contribution to the world is concerned; because in the end it is a contribution from Argentina to the legal certainty of the world and to the trust of those who believed in us
I think it is important that we could say these things
Finally, for those who say that we are fond of talking about the past
And who think that the past has already "passed"
I think that this "last" Friday, on Friday last week
It has been proved that the past, in economy above all, is always just around the corner
That all it takes is somebody making a mistake, or for somebody to have other interests other than representing the interests of the 40 million people of Argentina
In order to undo the things we have work so hard to achieve in the past few years
These things we sometimes recall from the past is not in the mood of supervising
or pointing our finger at, or outstanding what we do, on the contrary
We do this so that we try and not make the same mistakes, the Argentinians, myself included, even though I haven't been part of any "Debt Taker " Administraton
Although I am part of the Argentina and I feel as responsible as the 40 million people from this country
Maybe a little more responsible becouse I have been elected to lead this country's future
In closing, I wanted to communicate these important decisions we have made
The re-opening of a third debt swap, a third swap bill
I hope, as the saying goes around, third time lucky; and we could finally make the remaining 7% of the bond holders part of the debt restructuring
Also, I want to make a call for reasonable decisions and common sense. It cannot be possible that a 0.45% of bond holders,... 256 ...that acquired the bonds at so low a price, put the remaining 93% of our creditors at risk
Bearing in mind the amount of money we have paid, and the money we still have to pay, and particularly the possiblility to continue to grow in Argentina
To create new jobs, to provide health care, education
And at the same time to fulfill our obligations
For this reason, I wanted to address all the Argentinian people
As well as all those who have believed in Argentina
Who have trusted, please go on trusting
Because we are in command of this ship and we are leading it to a safe port
And we also believe that, we have faith that, common sense should prevail over lobbying
Where 0.45% of the bond holders is on the verge of imposing its will over that of the remaining 93%
At the same time, I am a lawyer, and I know that this definitely affects equality between the parties
I know that this affects equidad, I know that this affects the legal certainty
I know that this affects the certainty that economic and financial relations must have
And for that reason we petition the authorities that be confident of the responsibility with which we have conducted ourselves
We also ask responsability to those who are to make the decisions
Be as it may, I also want to say that Argentina is not going to violate its own laws and the Congress of Argentina is going to be part of this so important an issue
Just like it was part in 2005 and 2010
This restructuring has enabled Argentina to grow and to fulfill its obligations
Thank you for your attention
And good night everybody