Argentina’s Senate approved a government plant to nationalize roughly $26 billion worth of private pension funds. The plan was approved by an ample margin as one opposition senator confessed that the privatization of pension funds “didn't work at all these past 14 years.”The plan is expected to be singed by President Cristina Kirchner who has faced increasing problems with the country’s faltering economy. Though polls show that most Argentines are in favor of the plan, critics worry that the package will hurt Argentina’s finances:
“It’s a substantial blow to the capital markets,” said Eduardo Costantini, the 62-year-old chairman of Buenos Aires- based real-estate and asset management group Consultatio, the sole Argentine company to go public this year. “The only long- term investor with characteristics of the pension fund industry disappears with this”…Image- Al Jazeera English
Argentina’s index is down 60 percent this year, compared with the 51 percent decline in Brazil’s Bovespa index and 38 percent slide in the Mexican Bolsa. Argentina’s economy, which slipped into a recession after the government defaulted on $95 billion of debt in 2001 before recovering, is headed for a slowdown. That may lower tax revenue and hurt its ability to meet debt payments, according to Goldman Sachs Group Inc. economist Pablo Morra.
Sources- The Latin Americanist, AFP, AHN, Bloomberg, Al Jazeera English
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