BUENOS AIRES, Argentina (AP) – Argentina said Tuesday that it had reached an agreement with its top creditors to restructure $65 billion in foreign debt, offering some relief to a country through the recession long before the pandemic.
The agreement will allow creditor teams to “accept Argentina’s debt restructuring proposal and provide significant debt relief to Argentina,” the Ministry of Economy said in a statement. He said some payment dates will replace without expanding the total amount of capital and interest payable “while expanding the price of the proposal to the creditor community,” according to the statement.
The reported agreement follows seven months of discussions and adjustments in time, and coincided with a prolonged era of economic hardship in Argentina, where unemployment and inflation are stubbornly high and the weight has been falling for years. The pandemic has made matters worse, with Argentina implementing a blockade that has helped curb the spread of the new coronavirus, but has paralyzed giant sections of the economy.
“We solved a debt that is most unlikely, the worst economic crisis in memory and in the midst of a pandemic,” President Alberto Fernandez said.
Argentina has also been concerned in talks with the International Monetary Fund on the restructuring of $44 billion in debt to the lender. The agreement Argentina announced Tuesday saw through analysts as a step forward that can pave the way for progress with the IMF, even if Argentina’s economic fortunes seem fragile in the long run.
IMF Managing Director Kristalina Georgieva praised Argentina for reaching an agreement “in principle” on the nation’s debt.
“A very significant step. Expect a conclusion in everyone’s interest,” he said on Twitter.
“Today’s sovereign debt restructuring agreement between the Argentine government and personal creditors allays fears of a debilitating legal rebuttal, similar to what followed the country’s default in 2001,” Capital Economics said in an analysis.
“However, we doubt that the agreement is sufficient for the sustainability of Argentina’s public debt in the medium and long term,” said the London-based consultancy.
Fernandez won the election last year, building on the discontent with the management of the economy of former leader Mauricio Macri. Macri had made the decision to impose the fiscal field and revive a capricious economy, but the situation deteriorated further and eventually turned to the IMF for a record financial settlement.
Opponents had linked Fernandez to populism beyond the left of his vice president and former president, Cristina Fernández de Kirchner (the two are unrelated), his tenure has so far been governed through efforts to avoid a default and to find a compromise. with creditors.
The agreement with the creditor teams announced on Tuesday adjustments in the payment dates of the new bonds to January 9 and July 2021, instead of March 4 and September 4 of the same year as in the proposed past, according to the Ministry of Economy. These bonds will “begin to pay off in January 2025 and expire in July 202nueve,” he said.
Argentina will also modify certain legal clauses in the new bond documentation to comply with creditors’ proposals “seeking the effectiveness of the contractual framework as a basis for resolving sovereign debt restructuring,” the ministry said.
Creditors have until August 24 to reach an official agreement with the agreement, the ministry said, extending the deadline for its past due date on Tuesday.
An investigation by Citi noted that creditor teams had not yet issued support for Argentina’s amended terms, but said the more recent economic situations of the two parties had given the impression that they were close. He noted that Argentine bonds had skyrocketed when the deal was announced.
“With the elimination of this uncertainty and a possible commitment to the IMF, additional innovations are likely to occur in the coming weeks,” Citi said, adding that local assets deserve to “temporarily benefit” from the announcement.
___
Torchia reported from Mexico City.