NewsWhore
06-15-2009, 03:10 PM
Pedro Perez, president of the National Organization of Commercial Stores (ONEC) has cautioned against the issuing of sovereign bonds, as reported in Diario Libre. He said more debt is not the solution, because it is not known if the money would be allocated to current spending or to productive infrastructure works that generate jobs and not just simply cover a deficit.
"It is not healthy to issue bonds for financing without previously undergoing a strict austerity program, so what should be sought is a way for the government to reduce its spending," he said. "In the first quarter, 89% of the funds were allocated to current expenditure. Only 11% was for infrastructure," he said, as reported in Diario Libre.
Economist Henri Hebrard also expressed his concern that without an agreement with the International Monetary Fund, there would be no supervision on the government's use of the funds. He told Diario Libre that if there were an agreement with the IMF, the interest rate on the sovereign bonds would be lower.
Economist Gustavo Volmar, writing in Diario Libre, says that the government's track record on the use of the sovereign bonds money is not good. "Specialists and public figures indicate that the use of the funds generated by the 2001 sovereign bonds did not follow a rational order of priorities," he says. He warns that back then the funds contributed to an economic expansion that led to inflation and depreciated the peso, which could happen again.
"The government has not given clear indications that it is willing to comply with rational use of public spending. Its announcements for savings are due to the impact of external events, such as a decline in the price of petroleum," he explains. Furthermore, he writes that with this in mind, "the issuing of bonds could be seen as an alternative mechanism for the government to avoid submitting to the financial discipline of the IMF."
More... (http://www.dr1.com/index.html#5)
"It is not healthy to issue bonds for financing without previously undergoing a strict austerity program, so what should be sought is a way for the government to reduce its spending," he said. "In the first quarter, 89% of the funds were allocated to current expenditure. Only 11% was for infrastructure," he said, as reported in Diario Libre.
Economist Henri Hebrard also expressed his concern that without an agreement with the International Monetary Fund, there would be no supervision on the government's use of the funds. He told Diario Libre that if there were an agreement with the IMF, the interest rate on the sovereign bonds would be lower.
Economist Gustavo Volmar, writing in Diario Libre, says that the government's track record on the use of the sovereign bonds money is not good. "Specialists and public figures indicate that the use of the funds generated by the 2001 sovereign bonds did not follow a rational order of priorities," he says. He warns that back then the funds contributed to an economic expansion that led to inflation and depreciated the peso, which could happen again.
"The government has not given clear indications that it is willing to comply with rational use of public spending. Its announcements for savings are due to the impact of external events, such as a decline in the price of petroleum," he explains. Furthermore, he writes that with this in mind, "the issuing of bonds could be seen as an alternative mechanism for the government to avoid submitting to the financial discipline of the IMF."
More... (http://www.dr1.com/index.html#5)