Argentina's Scioli Urged by Ally to Pursue Accord With Creditors

  • Governor of Salta province says Argentina needs investment
  • Argentina should reveal inflation methodology, Urtubey says

Daniel Scioli, the ruling party candidate and frontrunner in Argentina’s presidential elections later this month, should hold talks with holdout creditors from the nation’s 2001 default as soon as he takes power, said ally Juan Manuel Urtubey.

Urtubey, the governor of Argentina’s Salta province, told reporters in New York that resolving the decade-long legal battle will allow the nation to regain access to overseas capital, which is crucial for improving its competitiveness. Only with the funding can Argentina develop the infrastructure required to make local producers competitive, he said. It’s also the key to reducing subsidies that have widened the fiscal gap, he said.

“Because of what settling with the holdouts means in terms of financing for Argentina, you’re in a position where you’re losing money if you don’t do it,” Urtubey told reporters at the Council of the Americas in New York. “We need financing to grow.”

President Cristina Fernandez de Kirchner’s refusal to negotiate with the holdouts, who won a U.S. court ruling requiring the nation to pay their repudiated debt when making payments on other bonds, pushed Argentina into default last year for a second time in 13 years. Still, prices on the nations notes have surged on speculation the her successor will resolve the dispute and unwind policies that fueled inflation and slowed the economy.

Scioli said last month that he would try to meet obligations with Argentina’s creditors under “fair, equal and legal” terms. Urtubey said Scioli is aware of investors’ expectations for the next administration.

“Our biggest challenge is getting things done on time so that those expectations can transform into reality and investment in Argentina,” he said.

The nation’s statistics agency, which unveiled a new consumer price index last year after being censured by the International Monetary Fund for misreporting economic data including inflation, should once again revise its methodology, Urtubey said. Because official figures have continued to diverge from private estimates, there is no reference point to guide public policy or anchor inflation expectations, he said.

Regarding investors’ concerns that Fernandez will remain influential during the next administration, Urtubey said that the decisions will be made by the government in power.

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