Trust The Argies - They're At It Again
Argentina's government says it will nationalise $29 billion worth of private pension funds to protect retirees during the global financial crisis.
But critics say it is simply a cash grab and that the nation is headed for its second default in a decade.
Argentina's head of social security administration said yesterday the government will keep the same investment mix for the funds, with 60 percent in bonds and 10 percent in stocks. He called the privately run system an "enormous error."
Currently, about 55 percent of the 94.4 billion pesos ($29.3 billion) held by the private pension funds is invested in government debt, according to the pension regulator's Web site. A takeover would allow the Fernandez administration to write off the sovereign bonds held by the funds, said a Buenos Aires-based analyst.
Argentina has been mostly isolated from the international financial crisis, with the government and local banks largely frozen out of international credit markets because of a government default in 2005.
Argentina remains one of the world's largest debtor nations and next year it will need nearly $20 billion to meet interest payments alone.
But critics say it is simply a cash grab and that the nation is headed for its second default in a decade.
Argentina's head of social security administration said yesterday the government will keep the same investment mix for the funds, with 60 percent in bonds and 10 percent in stocks. He called the privately run system an "enormous error."
Currently, about 55 percent of the 94.4 billion pesos ($29.3 billion) held by the private pension funds is invested in government debt, according to the pension regulator's Web site. A takeover would allow the Fernandez administration to write off the sovereign bonds held by the funds, said a Buenos Aires-based analyst.
Argentina has been mostly isolated from the international financial crisis, with the government and local banks largely frozen out of international credit markets because of a government default in 2005.
Argentina remains one of the world's largest debtor nations and next year it will need nearly $20 billion to meet interest payments alone.
