Argentina pays off crisis bond but savers count cost

Argentina celebrated Friday after paying the final $2.2 billion installment on a bond handed to people whose savings were seized during the country's crippling economic crisis a decade ago. When the Latin American powerhouse plunged into one of the largest debt defaults in history -- $100 billion -- it froze bank deposits and forbade withdrawals in a process known as the "corralito" aimed at stopping bank runs. "We have finished reimbursing the 'corralito,'" the Ministry of Economy said on its website, as a countdown clock marked zero. With the final payment "we left behind a nefarious period the Argentine people had to endure," Finance Minister Hernan Lorenzino said in a statement. "We left behind economic models that allowed easy entry to capital and financial speculation, with a cost the country's poorest always ended paying," he said. Argentina's national debt, which reached 92 percent of GDP in 2001, now stands at just 8.4 percent of GDP after the latest payments, according to government figures. President Cristina Kirchner had hailed it as "the end of a historic era." "What we will reimburse now is nothing else but what the banks should have reimbursed citizens," she said Thursday. Kirchner said that only 22 percent of the bond holders are in Argentina, while the rest are foreigners, mainly located in the United States. She did not identify them. However those in Argentina are a union and a bank which, according to the president, was spreading rumors that the bond would not be paid. In December 2001, then economy minister Domingo Cavallo ordered all Argentine bank deposits -- some $70 billion -- to be frozen in an attempt to prevent the banks from collapse. In order to compensate savers, the government issued $19.6 billion in notes to those whose accounts had been frozen. Some Argentines recovered their savings thanks to court decisions. But others are still fighting to get them back. "For thousands of us it is far from over," said Hugo Vazquez, secretary of a victims group, referring to ongoing legal cases involving compensation. He said the corralito ended only in the eyes of the government, but not for those affected savers. Washington has repeatedly said that Argentina must settle disputes with its creditors if it wants to have US support at the World Bank and the Inter-American Development Bank. The United States is the biggest stakeholder at both the World Bank and the IADB, though its opposition would not be enough to block financing of a project. US lawmakers and groups of American creditors last year asked President Barack Obama's administration to increase pressure on Buenos Aires to make good on its delinquent debt. Roberto Lavagna, an economist who served as Argentina's economy minister from 2002 to 2005 and is seen as the architect of the recovery, recalled the freezing of people's accounts as "a desperate decision that made the situation worse." The corralito left "scars in the collective consciousness" of the nation, he said. Those who were left struggling to make ends meet recall only hardship. "I had been laid off and placed my compensation in an account in dollars," Alberto Aran, 70, told AFP from his home south of Buenos Aires. "My wife had a rare disease and I was not able to withdraw a single cent to pay for her treatment." The bank then left Argentina without reimbursing its customers and "we had to sell a small house, at the worst time for half its (real) value," he said. Aran's wife has since died. He never recovered his dollar savings, despite a lengthy trial, and still attends meetings of other savers who lost out in what he said was a form of therapy.