Argentina gets guarantee to restructure its debt and comes out of suspension of payments
Argentina has obtained the guarantee to restructure 99% of its debt with bonds in foreign law for some $66 billion this Tuesday. With this agreement, the country manages to get out of the suspension of payments. It has been more than four months of arduous negotiations with powerful investment funds. "Today we cleared an obstacle. In short, I hope that we clear the obstacle of the debt with the International Monetary Fund", explained the Argentine President, Alberto Fernández, in declarations published by the Efe agency.
According to the government, thanks to this agreement, which will be finalised next Friday, Argentina will have debt relief over the next decade of 37.7 billion dollars and the average interest rate it pays on issued bonds will fall from the current 7% to 3.07%. "None of this has been easy, but we did it. If there is one thing that we Argentinians know, it is how to get up when we fall. In December we felt that we had fallen. Today we are on our feet again and on the move. Let's celebrate", insisted Alberto Fernández.
The economy minister, Martín Guzmán, who has been in charge of the tough negotiations with the three largest groups of creditors since April, said that the exchange of foreign-legal bonds, together with the imminent restructuring of local-legal bonds into 41.714 billion dollars, puts the country in a "much healthier and more solid" situation for facing the future. The minister assured that "relief" will be provided to the "fundamental" public sector in order to implement the policies necessary for the development of the country, whose economy is in a two-year recession with high inflation rates, a scenario that has been aggravated by the COVID-19 pandemic, with a sharp increase in the fiscal deficit and a GDP that is expected to fall by 12.5% this year, according to private forecasts.
Mr Guzmán explained that the swap also makes it possible to generate conditions of exchange rate stability and better financing for the private sector. "Now we can think of another Argentina. This Argentina, which is still struggling with the pandemic, can start thinking about its future and how to build itself," Fernández said. The immediate objective will be to increase production and employment, encouraging investment and exports.
The president stressed the "enormous effort" his government has made to convince the world that the country should restructure its debt "without condemning Argentines to prostration," and thanked the international support it has received in negotiations with private creditors.
In particular, he expressed his gratitude to Pope Francisco, who helped "silently"; to the President of Mexico, Andrés Manuel López Obrador; to the Prime Minister of Italy, Giuseppe Conte; to the President of the Spanish Government, Pedro Sánchez; to the German Chancellor, Angela Merkel; and to the President of France, Emmanuel Macron.
Special thanks were also expressed to the Managing Director of the IMF, Kristalina Georgieva. "It sounds strange, but Kristalina Georgieva also helped Argentina to find this result. And one must thank her for the effort she has made so far," he said. Last Wednesday, the Fernández government formally requested the Fund to begin negotiations to refinance the debt of some 44 billion dollars that the South American country has with that organisation.
Guzmán reiterated this Tuesday that Argentina cannot pay the IMF this debt between 2021 and 2024, as agreed in 2018, and so a new agreement is being sought that will provide the country with financing to be able to cancel the commitments with the organisation. "Basically, to refinance these debts and thus have more time to recover the economy and generate the capacity to pay consistent with the commitments that are being taken," he concluded.
