Argentina has reached an agreement to avoid another damaging default by delaying most of a $ 2.4 billion payment due to a group of rich countries in late July, the country’s ministry said Tuesday. economy, Martín Guzmán.
Argentina has until the end of March to reach an agreement with the so called Paris Club of 22 countries, which includes the US, Germany, Japan and France.
Guzmán said Argentina will pay only $ 430 million in two installments earlier, the first from July 31, when the 60-day grace period for the $ 2.4 billion payment originally expired on May 30. . Guzmán said the agreement will effectively save the country $ 2 billion over the next eight months.
The agreement will give some respite to Argentina’s struggling economy, with foreign exchange reserves plummeting despite receiving a boost from rising commodity prices in recent months.
“Solving the problem of our unsustainable debt is a fundamental pillar of the process of restoring stability to the economy,” Guzmán said at a press conference in Buenos Aires. He said it would also help lower annual inflation, which stands at almost 49 percent.
The agreement with the Paris Club comes as a surprise negotiations they settled on the $ 45 billion repayment the IMF has lent Argentina since a 2018 monetary crisis during Mauricio Macri’s previous government.
Local analysts say talks with the IMF have stalled due to political considerations, with midterm elections approaching in November, when the government will not want to be hampered by tight budget cuts agreed with the multilateral provider.
Although Argentina was initially expected to reach an agreement with the IMF last year – shortly after a successful restructuring of about $ 65 billion due to private creditors – the absence of an agreement containing a commitment to reduce the country’s unbalanced fiscal deficit was complicated by talking to the Paris Club.
“Payment of this amount would have been a blow to international reserves and has generated more instability for the exchange rate and the macroeconomy in general,” Guzmán said, adding that a default would destabilize the economy and cause greater uncertainty. .
Guzmán said the government would continue to talk “constructively” with the IMF, and that the March deadline with the Paris Club “has nothing to do with the goal of an agreement with the IMF. Our goal is to ensuring a good deal, the sooner the better, but the priority is to be good ”.
The 38-year-old minister added that another key element of the agreement with the Paris Club was that Argentina treat its creditors equally, to calm concerns in Japan that Argentina was paying its debts to China but not at the Paris Club.