Argentina's Economy in Recession
The fall-out from Argentina's debt crisis continues to worsen as economic pressures on Argentina's economy grow. The Argentinian peso has weakened by 22% against the US $ since default. Inflation continues to rise, resulting in a nation-wide strike in August against rising prices. Government reserves continue to slide, despite a temporary boost from a good soya bean harvest. Argentina is now formally in recession. Import controls, introduced in 2012, have led to a WTO ruling that Argentina is in breach of its GATT obligations and Argentine exports have failed to pick up, despite the Argentine Government's devaluation of the peso by 26% in January this year.
On 11 September, Argentina's Congress duly passed President Kirchner's bill to replace the Bank of New York as the fiduciary agent for restructured bonds by Argentina's state-owned bank. This was a move to avoid US jurisdiction in the debt crisis. Whether this will be successful and whether bondholders will accept the change remains to be seen. Undoubtedly, the US judge will consider holding the Argentine Government in contempt of court.
Whatever the case, it does little to enhance Argentina's reputation. The mismanagement of its economy and attitude towards debt repayment hardly encourages Falkland Islanders to hope that it might, one day, be a stable, reliable or honourable neighbour.