Argentina reaches an agreement to restructure $ 66 billion of its foreign debt

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Buenos Aires (AFP)

Buenos Aires announced Monday that it has reached an agreement to restructure 99% of its $ 66.13 billion in foreign-issued debt, in a move that culminates in more than four months of arduous negotiations between Argentina and its creditors that would bring the country out of a state of default.

Argentine Economy Minister Martin Guzman said that according to the agreement, “99% of the issued debt has been restructured in accordance with the provisions of foreign legislation.”

The announcement comes less than a month after Buenos Aires announced that it had reached an agreement with three groups of the country’s main creditors to renegotiate the terms of the debt.

Guzmán added, with President Alberto Fernández and Vice President Christina Kirchner standing by his side, that “thanks to the dialogue process, there was broad acceptance” of this agreement.

The minister explained that thanks to the agreement reached, his country will receive an exemption from paying $ 37.7 billion in debt, while the annual interest rate will decrease from 7 percent to 3.07 percent.

He added, “This gives us a sufficient economic time frame to develop sustainable policies that achieve development.”

The minister pointed out that this agreement removed from the country the specter of being prosecuted abroad by speculative funds, which is a nightmare that it had previously experienced in the past.

In turn, President Fernandez welcomed the agreement, stressing that her country is able to fulfill its obligations contained in it. “We are out of the maze,” he said.

As for the rest of the dollar-denominated debts that are not covered by the agreement, amounting to 1% of the total of these bonds, Matthias Rachnermann, an analyst at Ecolatina, said, “This debt will definitely be repaid, this is a very small amount.

Under the agreement, Argentina will pay these bondholders 54.8 cents for every dollar, a significant increase compared to the 39 cents it initially offered them.

These bonds represent roughly 20% of Argentina’s total $ 324 billion debt, which equates to 90% of the country’s GDP.

Argentina has been in default since May 22, when it had to pay $ 500 million in interest on these bonds.

The Argentine economy has been in recession since 2018 and will suffer more this year due to the Covid-19 epidemic, with gross domestic product shrinking by 9.9%, according to IMF projections.

Reaching this agreement would facilitate the negotiations that the government launched with the International Monetary Fund last week to obtain a new loan.

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