default

China might soon be littered with incomplete building projects and half-built roads.

Chinese banks have been ordered to trawl through existing loan agreements that are ultimately used by local governments to raise funds – and stop lending to those projects backed only by expected fiscal revenues. The aim is to reduce the chance of default. 

Zimbabwe’s central bank owes mining companies “a substantial sum of money” that it is unable to repay at the moment, the Mines Minister says. Zimbabwe “empathises with the mining companies and feels obliged to make good,” Obert Mpofu said at a presentation in Cape Town today. (from Bloomberg)

So says Argentine central bank governor Martin Redrado, after a great deal of confusion. Judge Thomas Griesa was reported as lifting the ban, but hours later Mr Redrado told the press he could not access the account. The embargo was part of a long-running legal action by bondholders still unpaid since the 2001 Argentinian default. The dispute is not directly related to the Argentinian President’s recent (indeed, ongoing) attempts to unseat Mr Redrado.

Argentina seems determined not to repeat the default of 2001. Economy minister Amado Boudou has said $6.6bn of the central bank’s international reserves will be placed into a fund this month, to help the government pay bondholders and international lenders for debts. The fund will cover about half of $13bn interest and principal payments due in 2010. The government said today it will give the central bank 10-year dollar-denominated notes, known as Letes, in exchange for the funds.