Rafael Correa, the leftist leader who governed Ecuador for a decade and defaulted on its debt, and his protégé in next year’s presidential election said they would reject the spending cuts requested by the International Monetary Fund as part of a loan deal, Bloomberg News reported. “These austerity policies kill economies,” Correa said in an interview from exile in Belgium. “We’ll check all of this.
Nearly half of Argentina’s population was living in poverty in the second quarter, a sharp increase from last year, as the country’s longstanding economic crisis deepened due to the coronavirus pandemic, researchers estimated on Wednesday, Reuters reported. The Catholic University of Argentina (UCA) estimated the poverty rate spiked to between 46% and 47% by the end of June following months of strict lockdowns to battle the spread of the virus.
Argentina will make interest payment due on dollar and euro-denominated “Par” bonds on Wednesday this week, the country’s Economy Ministry said in a statement on Monday, closing off an unresolved issue from its recent major debt revamp, Reuters reoprted. The government had failed to restructure a small number of bonds, including the Pars, as part of an otherwise successful $65 billion foreign debt restructuring, which saw 99% of eligible debt exchanged at the end of last month.
Argentina’s newly restructured dollar bonds have slumped in value less than a month after a deal was finalised to postpone debt payments, as fears grow about the country’s economic health, the Financial Times reported. On August 31, Argentina clinched near-unanimous approval from its bondholders to restructure $65bn of foreign debt after months of sparring. The country’s sovereign bonds began trading this month, and have already fallen towards distressed levels.
Argentine companies are facing an increasingly difficult task to keep up with payments on dollar debt, hiking the risk of a wave of corporate defaults after the country tightened access to foreign currency to stem a sharp decline in reserves, Reuters reported. The central bank move, which pressured firms to restructure their debts and tightened individuals’ access to greenbacks, jolted local markets, pummeled bond prices and equities and heightened demand for black market dollars.
Less than a month after Argentina’s $65 billion debt restructuring, bond prices show growing concern the government may struggle to pay its obligations, Bloomberg News reported. The country’s yield curve has inverted in the week since officials announced foreign-exchange restrictions to help conserve cash. Investors perceived the move as an act of desperation instead of a workable solution to stem the drain in foreign reserves, and prices for short-term bonds dropped.
Argentina’s unemployment rate jumped to 13.1% in the second quarter of the year as the country was swiped by the coronavirus pandemic, the official statistics agency said on Wednesday, the highest since 2004 and up from 10.4% in the previous quarter, Reuters reported. Argentina imposed a strict lockdown in mid-March, hitting an already shaky economy in recession since 2018 and leaving many businesses struggling to survive. The country now has over 650,000 confirmed cases of COVID-19.
Airline Avianca Holdings came under broad criticism in Colombia for paying its top two executives $6 million in bonuses in May, at a time when the carrier had furloughed most of its employees without pay and was preparing a bankruptcy filing, Reuters reported. According to bankruptcy court documents submitted by Avianca itself, the airline paid Chief Executive Anco van der Werff $3.7 million and paid Chief Financial Officer Adrian Neuhauser $2.8 million on May 6. Five days later, the airline filed for Chapter 11 bankruptcy protection in the U.S.
Avianca Holdings SA, one of Latin America’s largest airlines, lined up a $2 billion bankruptcy-loan package to finance its stay in chapter 11 from a group of investors and lenders including United Airlines Inc. and Chairman Roberto Kriete, The Wall Street Journal reported. Since filing for bankruptcy in May after the coronavirus pandemic curtailed flying, Avianca has been working to raise capital to stay in business as air travel remains deeply depressed world-wide.
Argentina’s economy contracted a record 19.1% in the second quarter versus the same period a year earlier as the coronavirus pandemic crippled production and demand, though was slightly better than analyst forecasts, Reuters reported. The steep fall, deeper than a 16.3% drop during Argentina’s major 2002 crisis, came as the South American country imposed a strict lockdown in mid-March to stem the virus. The country has over 640,000 confirmed COVID-19 cases, and nearly 13,500 deaths.