Argentina avoids default in debt deal with Paris Club

Argentine Economy Minister Martin Guzman said on Tuesday that Argentina had reached an agreement to avoid another harmful default by delaying the bulk of payments from a group of rich countries worth $2.4 billion by the end of July.

Argentina now has until the end of March to reach an agreement with It’s called the Paris Club From 22 countries, including the United States, Germany, Japan and France.

Guzmán said Argentina will only pay $430 million in two payments before that date, the first by July 31, when the 60-day grace period for the $2.4 billion payment originally due on May 30 expires. Guzmán said the agreement would effectively save the country $2 billion over the next eight months.

The agreement will provide some breathing room for Argentina’s faltering economy, with foreign exchange reserves being significantly depleted despite receiving a boost from higher commodity prices in recent months.

“Resolving our unsustainable debt problem is a key pillar in the process of restoring stability to the economy,” Guzmán said at a press conference in Buenos Aires. It will also help mitigate annual inflation, which is around 49 percent, he said.

The agreement with the Paris Club comes Negotiation It was halted due to a $45 billion repayment by the International Monetary Fund to Argentina since the currency crisis in 2018 during the previous government of Mauricio Macri.

Local analysts say talks with the International Monetary Fund have stalled due to political considerations, with midterm elections approaching in November, when the government does not want to be bogged down by drastic budget cuts agreed with the multilateral lender.

Although Argentina was initially expected to reach an agreement with the International Monetary Fund early last year — shortly after the successful restructuring of about $65 billion owed to private creditors — the lack of a deal includes a commitment to reduce The country’s ballooning fiscal deficit has complicated. Conversations with the Paris Club.

“Paying this amount would have taken a blow to international reserves and lead to more exchange rate instability and the overall economy in general,” Guzman said, adding that a default would have destabilized the economy and caused greater uncertainty.

Guzman explained that the government will continue in “constructive” talks with the IMF, and that the March deadline with the Paris Club “has nothing to do with the goal of reaching an agreement with the IMF. Our goal is to secure a good deal, the sooner the better.” , but the priority is to be good.”

The 38-year-old added that another key element of the agreement with the Paris Club is that Argentina will treat its creditors equally, in order to allay fears in Japan that Argentina is paying its debts to China and not to the Paris Club.

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