Argentina is negotiating to suspend the payment of its debts 3 years

The Argentine government plans to reduce its debt to foreign creditors, as it faces a severe recession amid the pandemic of the emerging Corona virus. Argentine Economy Minister Martin Guzman said Thursday evening that both debt and interest payments would be delayed for three years.

In total, the government’s plan to reschedule public debt relates to writing off 62 percent of the debt’s interest, or $ 37.9 billion, and 5.4 percent of the capital, or $ 3.6 billion. Argentina also requests a 3-year freeze, which means that no amount will be paid until 2023.

Yesterday the proposal for formal restructuring was presented to creditors. Beginning in 2023, the government then wants to resume and increase interest payments step by step. “It is clear that Argentina cannot pay anything at the moment,” Guzmán added.

Argentina faces a serious economic crisis, and suffers from inflation of the state apparatus, low industrial productivity, and a large size of the shadow economy, which deprives the state of tax revenues.

The government announcement of its plan led to the fall of the Buenos Aires Stock Exchange by 6.21%. After this announcement, the Argentine President said, “(Friday) will be a decisive day. The markets will know what Argentina can pay and accomplish. ” On Thursday, the Buenos Aires stock exchange declined, even though it recorded a significant increase between Monday and Wednesday (3.08%, then 6.58% and 4.19%).

“We tried to understand what creditors preferred, so here is a proposal that includes a further reduction of the interest on capital,” the economy minister said. Private creditors have 20 days to respond to the proposal. The next due on April 22 is $ 500 million.

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“It will be complicated negotiations, but it is not impossible,” Claudio Lozer, a senior official at the International Monetary Fund, said, referring to the current conditions linked to the outbreak of the Corona virus that has affected the global economy.

“But it is negotiations … If Argentina makes this proposal as the only option, it will find itself in a very difficult situation,” he added. They have to sit down to negotiate. ”

In the process, the Argentine government is seeking to renegotiate bonds in foreign currencies at about $ 70 billion under international custody, which could expose it to arbitration procedures.

But the past of the countries that witnessed in 2001 the largest default on debt ($ 100 billion) is not in its interest.

On the International Monetary Fund, from which Argentina borrowed 44 billion dollars, Guzmán announced that the government was working on a new timetable for payment. He added: “We continue to work with the IMF in the form of a new timetable. Argentina does not have to pay any amount to the IMF during the next three years.”

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