The International Monetary Fund: Argentina has a narrow scope to strengthen its debt restructuring offer

The International Monetary Fund said that Argentina’s latest offer to restructure its debt will restore its debt sustainability, and that there is little opportunity to further increase its payments to private creditors.
The Fund said in a two-page statement published yesterday: “There is only a limited scope for increasing payments to private creditors, and it still has to meet the debt and service that debt.” The Fund added in its statement: “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 a “technical note” on March 20, in which it analyzed the government’s ability to pay debts.
On Monday, the Argentine government said it would extend the deadline for talks with creditors to restructure a $ 65 billion foreign debt to June 12. The original deadline expired on Tuesday (yesterday). The additional extension comes after Argentina last month failed to pay interest on bonds, while officials and creditors looked to bring the two sides closer to a broader debt restructuring agreement.
Financial market experts said there was an “important level of acceptance” in Argentina’s offer, but there was no immediate information on the position of the investment funds, which would determine the outcome.
The offer to reschedule about $ 65 billion, representing the value of treasury bonds, aims to postpone payments for 3 years and write off 62 percent of the interest rate and 5.4 percent of the value of the basic installments.
If it fails to agree with its creditors, Argentina faces the risk of bankruptcy.
It is noteworthy that Argentina is already suffering from an acute economic crisis before the outbreak of the emerging Corona virus (Covid 19) also hit the economy.
The inflation rate in the country exceeds 50 percent, and the International Monetary Fund expects the economy to contract at a rate of 5.7 percent of GDP this year.
The government says more than 20 percent of its revenue could go to debt installments service. This makes it impossible for her to fulfill her obligations to creditors.
3 groups of Argentine creditors rejected the latter’s offer to reschedule the debt. Creditors said the plan would incur disproportionate bondholders.
The creditors said in a previous statement early last month that «each of the three groups of bondholders, and the institutions they represent with the rest of the other investors, would like to confirm that they cannot support Argentina’s recent debt swap offer.
The creditors added that they considered that “the conditions that Argentina wants incurred are disproportionate losses that are unjustified and unnecessary.” But they added that they wanted to reach “an acceptable solution to the financial challenges currently facing the Republic.”
The three groups of creditors, which represent Argentina’s largest creditors, include companies: “Black Rock”, “Fidelity”, “GrayLock Capital” and “Ashmore”.
But 138 economic experts from 20 countries; Among them, Joseph Stiglitz and Edmund Phillips, who won the Nobel Prize in Economics, supported Argentina’s proposal as “reasonable” and properly reflected the country’s ability to pay.

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