The total issued this year stands at US$19.25 billion, with US$9.3 billion used to reimburse the aforementioned holdout vulture funds. A reasonable limitFor UBA economist Mariano Kestelboim, foreign debt “must be linked to the country’s ability to export and more importantly, its current account balance.” Currently, he addded, that balance is negative, with the deficit clocking in at three percent of GDP last year. The limit isn’t a number, but rather the capability a government has to channel debt to economic and socially profitable investments, Colina argued. More than one way to buildAlthough the initial justification that this year’s issuing spree would be directed at public works wasn’t entirely accurate — much went toward current account spending — it’s worth considering if foreign debt is the only way to boost public works and infrastructure. That’s the radical difference that explains why these countries can tolerate far higher foreign debt debt-to-GDP levels than Argentina, whose foreign debt clearly isn’t peso-denominated.

Source: Bueno Aires Herald October 02, 2016 02:12 UTC