Companies Fear Radical Turn in Argentina

Argentina has defaulted on its bonds twice since 2001. The country had settled with most bondholders, but the terms of some loans required disputes settled in US courts. A US judge sided with the minority, ruling that Argentina could not avoid the holdouts. A defiant Argentina swiftly responded with a swap plan to continue paying most creditors, but not the holdouts. Foreign firms doing business in Argentina express concern about radical interventions on foreign investment, bankruptcies and prices, reports Benedict Mander for Financial Times. “Concerns for the central bank’s autonomy intensified when interest rates were lowered after the default to stimulate the economy, rather than raised to prevent capital flight,” he writes. “The government’s unorthodox economic management came under further scrutiny on Thursday when beef exports were suspended to combat inflation, despite dollar shortages.” Rising inflation and a highly uncertain business climate are among the risks confronting 43 million Argentinians. – YaleGlobal