The future Director-General of the World Trade Organisation claims that Argentina will default on its debt repayment in the next days, a decision which will cause serious economic consequences.
Supachai Panitchpakdi made his declaration in Kuala Lumpur, Malaysia, on November 6th, one which if true, could have serious knock-on consequences not only for Argentina and Brazil, whose economy is closely linked to Buenos Aires, but also South-East Asia.
“I believe that Argentina will announce a de facto default in the next days”, Supachai Panitchpakdi told reporters. “We will have some contagion from this crisis due to our connections with the US economy and the slow-down in industry”, he added.
Argentina owes 132 bn. USD to financial institutions, mainly based in the USA. Other countries with strong links to the US economy could be affected by the ripple of nervousness provoked in the financial world by any such decision by Buenos Aires.
These declarations run against those of the Argentine President Fernando de la Rua and Economy Minister Domingo Cavallo on November 1st that Argentina was committed to meeting its debt repayments in full and that the PSBR (Public Sector Borrowing Requirement) would be reduced to zero by the end of 2002, by an issue of government bonds at a 7% coupon.
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