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Argentina Returns Frozen Bank Deposit Funds

On August 2, President Cristina Fernández de Kirchner announced on national television the payment of the last installment of BODEN 2012, an elective national bond which was issued on February 3, 2002, and matured on August 3, 2012.

How did BODEN 2012 come about?

With the crisis in Argentina in 2001 and the massive flight of capital from the country, Public Emergency Law 25561 and Exchange System Reform was enacted in January 2002, which precluded people with savings in banks from withdrawing their money. This measure, which lasted a year, gave rise to the term corralito (freeze on bank deposits) or blindaje (financial shield).

Together with this measure, the end of the Convertibility Law was announced, under which Argentina's currency was 1:1 with the US dollar. The repeal of this law meant that every dollar in the hands of depositors would be converted into Argentine pesos at a rate determined by the government, whose valuation went to a rate of $1.40 per U.S. dollar and then to $3.80 per U.S. dollar. The other option was to acquire national government bonds, which funds would be returned at given intervals, and the final payment would come due in 2012; this is the BODEN 2012. Later, other return options emerged, payable in 2013, like the BODEN 2013, the Bonar X, and others.

These measures were announced under Decree 214/2002 which refers to the requirement of conversion to pesos.

Cristina Fernández de Kirchner - Photo from the Casa Rosada website, under a Creative Commons license

Cristina Fernández de Kirchner – Photo from the Casa Rosada website, under a Creative Commons license

Recalling the corralito era, the webpage El Canillita Digital [es] relates one of many events that happened as a result of the economic measures taken in early 2002:

Norberto Roglich, un jubilado que entonces tenía 62 años y sufría de diabetes ingresó a la filial local del Banco Bansud y, desesperado, lanzó un gritó que heló la sangre de los allí presentes, empleados y clientes del banco. “O me dan mi plata o volamos todos.” En su mano tenía una granada vacía que, sin embargo, logró engañar a las autoridades del banco. Ese día, Norberto regresó a su casa con su dinero, 22 mil dólares que, seguramente, representaban los magros ahorros de una vida…

Norberto Roglich, a retiree who was then 62 years old and suffering from diabetes, entered the local branch of Bansud Bank and, desperate, let out a cry that chilled the blood of all those present, bank employees and customers. “Give me my money or we'll all blow.” He had an empty grenade in his hand but managed to fool the bank officials. That day, Norberto returned home with his money, $22,000 dollars which surely represented the meager savings of a lifetime…

The story continues:

Pero el sentido común de Roglich, chocó drásticamente con la realidad de un gobierno, un Estado y todo un régimen político abocado al rescate de los bancos y el sistema financiero. Norberto sería condenado a una pena de dos años en suspenso por “extorsión y tenencia de arma de guerra” y finalmente cumplió 3 meses de prisión domiciliaria. El dinero, que Norberto llegó a esconder antes de su muerte, todavía no fue hallado por la policía.

But Roglich's common sense collided sharply with the realities of a government, a nation, and an entire political regime determined to save the banks and the financial system. Norberto would be given a two years’ suspended sentence for “extortion and possession of a weapon of war” and ultimately served three months under house arrest. The money, which Norberto was able to hide before his death, has still not been found by the police.

The funds returned to the Argentine people by the government on August 3, 2012, totals $2.3 billion U.S. dollars. The state news agency Telam [es] reported the payment:

Los 2.300 millones de dólares serán abonados el viernes y corresponden a la última cuota del Boden 2012, un bono de 10 años ideado como solución al corralito y la pesificación asimétrica de los bancos, que le demandó al Estado argentino una erogación total de 19.600 millones de dólares, entre capital e intereses abonados.

The $2.3 billion will be paid on Friday and represents the last installment of Boden 2012, a ten year bond devised as a solution to the corralito and the uneven conversion to pesos by the banks, that required an outlay by the Argentine government of $19.6 billion U.S. dollars between capital and interest paid.

While the announcement was being made on national TV, the Twitter tag #ChauCorralito [es] was trending, where Matias D'Angelo (@matidangelo) [es] tweeted:

@matidangelo: Decile al viejito que está comido por los gusanos bajo tierra que le van a pagar la guita que le afanaron hace 10 años#ChauCorralito

@matidangelo: Tell the old man who's buried and eaten by worms they're going to pay him the dough they stole from him 10 years ago

Javier Martin (@mzablog) [es], dissatisfied with the speech of the President of Argentina, writes:

@mzablog: Necesito un pasaporte para vivir en el país que está contando CFK, ¿dónde estará la embajada? #ChauCorralito

@mzablog: I need a passport to live in the country that CFK is counting on, where is the Embassy?

However, the user @MarceOzz [es] thinks:

@MarceOzz: Si no pueden dejar de lado el odio por un rato y valorar la importancia del#ChauCorralito ya no tienen remedio.

@MarceOzz: If you can't put aside yout hate for awhile and appreciate the importance of #ChauCorralito, there's no hope for you.

The control measures for foreign exchange implemented as of November 2011 explain the reason for firm control of buying and selling foreign currency on the stock market in Argentina, where the country needed to hold on to dollars to make the payment for Boden 2012. Gabriel, in the blog Patria Si, Colonia No,[es] describes:

Boden 2012 que hubo que pagarlo en Dólares, y como Argentina no emite Dólares, para poder tener los dólares tuvimos que tener todos estos años más exportaciones que importaciones, y para eso, se tuvieron que poner las trabas a las importaciones, las mismas que todo el tiempo critican los Grande Medios, los mismos que nos llevaron al desastre de 2001, que hoy este Gobierno Paga.
Es todo muy perverso, pero así se maneja la derecha.
Asi que enterese señora cacerolera que en 2001 el Gobierno y los Bancos le afanaron los ahorros, hoy, Este Gobierno Peronista: Negro, Populista, Bananero, Choripanero, o como quiera llamarlo, es el que le devuelve los ahorros y paga la inmensa deuda.

Boden 2012 had to be paid in dollars, and because Argentina does not produce dollars, in order to have the dollars, we needed to have more exports than imports all these years, and to do that, they had to put limits on imports, the same ones that are always criticized by Big Media, the same ones who brought us the disaster of 2001, which this government is now paying.

It's all quite perverse, but that's the way the right works. So Mrs. Cacerolera [women who bang pots and pans to protest], in 2001 the government and the banks stole your savings, today, this Peronist government: Black, Populist, Banana Republic, Choripanero, whatever you want to call it, is the one that returns your savings and pays back the huge debt.

Another tag trending in Argentina is #Boden2012 [es], where dissenting opinions are also appearing. Such is the case of Ciudadano Buenos Aires (CiudadanoCABA) [es], who writes with irony:

@CiudadanoCABA: El pueblo hoy se siente muy contento, sobre todos los que tenian #Boden 2012. Pregunto, alguna de la “gente común” tenía Boden2012 ???

@CiudadanoCABA: The people are very happy today, above all those who had #Boden. I wonder, did any “common people” have Boden2012???

Nery Persichini @NeryPersi) [es] tweets on inflation:

@NeryPersi: Ya somos económicamente independientes (pago de #Boden2012). También festejo que somos independientes de la inflación. Ah, no, pará…

@NeryPersi: We're now economically independent (#Boden2012 payment). And celebrate that we're free from inflation. Oh, no, wait….

In conclusion, Diego Penizzotto [es] analyzes in his blog the future economic situation of the country, after the process of getting out of debt:

es cierto que la deuda “no se termino”. Argentina sigue teniendo deuda, pero peso de esa deuda respecto a lo que Argentina es capaz de producir y generar a lo largo de un año (PBI) es mucho menor. En términos contables, Argentina es mas solvente. En términos económicos, es más sustentable a Largo Plazo. Cierto es también, que parte de la deuda que queda es deuda emitida durante el presente gobierno, mas allá de la espectacularidad y la pompa, con la que ayer se presento “el fin del corralito”, lo cual también es discutible, en tanto falta cancelar aun la ultima cuota del Boden 2013.

it's true that the debt is “not finished”. Argentina continues to have debts, but the burden of that debt with respect to what Argentina is capable of producing and generating over a year (GDP) is much less. In financial terms, Argentina is more solvent. In economic terms, it is more sustainable in the long term. It is also true that part of the debt that remains is indebtedness incurred by the current government, beyond the pomp and circumstance of yesterday's announcement of the end of the “corralito”, which is also debatable, as yet [the government] is still to close the last installment of Boden 2013.

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