A long way to go between Argentina and creditors

A long way to go between Argentina and creditors

Buenos Aires shows {flexibility} in debt restructuring negotiations totaling $ 65 billion

Thursday – 12 Shawwal 1441 AH – 04 June 2020 AD No. No. [
15164]

The Argentine economy minister expects the road to negotiations with creditors to be long (Reuters)

Buenos Aires: «The Middle East»

Argentine Economy Minister Martin Guzman said Argentina is “flexible” in debt restructuring talks with its creditors, but there is still a “long way” before a “sustainable” agreement is reached.
“Argentina is flexible regarding the set of factors that should form the basis of any offer” for a debt restructuring of $ 65 billion, Guzman said in an interview with German news agency DPA. However, he said, “We cannot make promises that we cannot fulfill … The agreement makes sense only if it is an agreement that takes care of Argentina entirely.”
Buenos Aires stresses that the debt installments cannot be so large that the state threatens to go bankrupt and leaves no room for the shrinking economy to start growing again.
Creditors rejected Argentina’s offer of a three-year moratorium, reducing interest payments by 62 percent, and reducing major payments by 5.4 percent.
Guzmán said that the government had not yet submitted a new proposal, and that negotiations with creditors were currently dealing with “conditions … including the issue of the supply structure”. The minister noted that Argentina is also in talks with the International Monetary Fund to assess its ability to pay. “From the moment Argentina adjusts its offer, there must be an additional 10-day period until the date on which the offer ends,” the minister stressed.
The minister refused to specify the possible length of negotiations. “It depends on the willingness of the parties to understand the restrictions facing the country, as well as on the ability of creditors to settle their differences,” he said. He noted that “creditors are very different, and they have different preferences on how to solve this.” He stressed that the most important of the duration of the talks is that «this needs a good solution. Argentina will only make a commitment if it can respect it. ”
At the same time, Guzmán said, Buenos Aires is discussing a possible new economic program with the International Monetary Fund, through which it is developing a “fruitful” relationship. The fund had previously given Argentina a $ 57 billion bailout package, the largest IMF credit line ever … but the International Monetary Fund is not very popular in Argentina, as critics blame it for austerity policies.
“The previous program was created very quickly, and it was a governmental decision, and the community was not involved,” Guzman said. He promised that this time there would be a “very important social discussion” on relations with the IMF.
Guzmán said that when President Alberto Fernandez’s left-wing government took office last December, it found that the country was “in a total economic crisis and deep debt, and that public finances were in poor shape.”
Argentina has already entered the state of default 8 times, the last of which was in 2001. Guzmán stated that the country now needs to “rebuild confidence” through “monetary and fiscal policies and exchange rate policies that are compatible with each other.” He pointed out that the other main element in creating confidence is “rescheduling debt and bringing it to levels that the country can deal with”.
The Corona pandemic crisis exacerbated Argentina’s economic problems. Guzmán said the country had made health its priority and imposed a “very strict sanitary quarantine.”
On the other hand, the International Monetary Fund said, on Monday, that Argentina’s latest offer to restructure its debt will restore its debt sustainability, and that there is little opportunity for another increase in its payments to private creditors, according to “Bloomberg” agency.
The fund said in a statement: “There is only a limited scope for increasing payments to private creditors, and it still has to pay the debts and service those debts.” In its statement, the Fund added: “The Argentine authorities’ revised proposal for debt restructuring will be consistent with the recovery of debt sustainability with a high probability.”
This is the first comment from the International Monetary Fund since it issued an 18-page “technical note” on March 20, in which it analyzed the Argentine government’s ability to pay debts.

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