After negotiating with the IMF, Guzmán travels to France to defer debt repayment with the Paris Club: what proposal does he have and why could he make it?

After concluding the agreement with the International Monetary Fund (IMF) and achieving an extension until March 31 of the two capital payments that Argentina faced this week in the amount of 2.8 billion dollars, the Minister of Economy said: Martin Guzman, Travels to France to advance negotiations to refinance outstanding debts with the Paris Club for $1515 million.

According to Palacio de Hacienda, “The Minister intends to meet tomorrow, Tuesday, with the President of the Paris Club, Emmanuel Mullen”, The ministry is led by Bruno Le Maire.

Economy reported that “after Guzmán’s negotiations, Argentina had reached a time bridge with Paris Club in June last year until March 31, 2022. The understanding avoided default and included a financial relief for Argentina of $2000 million,” due to the renegotiation of the agreement signed by the last Argentine Economy Minister. Christina Kirchner, Axel Kiselov.

Guzmán’s initial proposal is to have a seven-year agreement, with a two-year grace period, at an interest rate of 1% in the first 24 months and then 1.5%, compared to the 9% he launched for the agreement signed with Kicillof in 2014 for no agreement with the IMF. .

The fund’s board will meet on Friday the 25th to discuss the technical agreement that the agency’s staff has reached with the government, which is expected to be approved despite complaints. There is no history of high-level agreements – which were considered informally by the board – which were subsequently rejected in the plenary of the 24 directors who meet regularly.

Ratification of this agreement with the Fund It is a necessary step for the Paris Club to accept a more comprehensive refinancing at a lower rateas France proposed to Guzmán in 2021.

Last June, Guzman announced: “We have reached an understanding with the Paris Club to obtain a time bridge that will allow us not to face a case of non-compliance or default on July 31 of this year,” as the Economy Minister initially announced this week. Martin Guzman. He added that “in an 8-month period” it will face “a set of payments that will amount to about 430 million dollars,” which “implifies a financial exemption for Argentina in the amount of 2000 million dollars between now and March 31.” .

Initial agreement details

The annex to the decree on the list of creditor government agencies stipulates that the second installment will be paid on February 28, 2022, one month before the deadline set for reaching a final agreement on the payment form and payment deadlines. Balance owed.

President Albert Fernandez, Guzmán and the rest of the ministers signed the decree ordering, “in the framework of the understanding reached with the Paris Club, to postpone the payment of debts contracted under bilateral agreements signed with the countries assembled in the Paris Club.” Except for what was reached in Chapter 2 of this Decree, until the Ministry of Economy decides to resume it on the basis of the progress of negotiations with the mentioned countries, or as defined in the new framework agreement reached, or until March 31, 2022, whichever comes first.”. The countries mentioned in Article 2, which are authorized to make partial payments of debt services, are: Germany, Spain, France, the United States, Belgium, Denmark, Austria, Canada, Israel, Italy, Japan, Sweden, Switzerland, the United Kingdom, and the Netherlands.

Argentina passed May 31, 2021 as the payment deadline for that consortium of countries and opened a 60-day window until the end of July. After this grace period, the member states can declare the Argentine state in the event of non-payment of its debts.

More than half of Argentina’s debt to the Paris Club is concentrated in two countries: Germany (37%) and Japan (22%). follow behind The Netherlands (about 8%), Spain (6.68%), Italy (6.29%) and the United States (6.28%).

creditors

The appendix enables a better understanding of the types of debt negotiated under the Paris Club. The list includes debts with government agencies, such as Delcredere Ducroire, an official Belgian credit institution, the Export Development Bank of Canada, Denmark’s Export Kredit Fonden, the Bank of France, and the Gaelic State Foreign Trade Insurance Agency (Compagnie Francaise D’Assurance). pour le Commerce Exterieur, Coface), the insurance company Euler Hermes, from Germany, which, by country, is the main Argentine creditor under the club. There are also four unpaid credits to Italian agencies (two in euros and two in dollars), with Japan’s ExImbank and the United States and the direct debts of their creditors – as written in the appendix – the “governments” of Spain and Israel.

In total, there are 40 accreditations granted by agencies from 16 countries. The age of the original credits means that many are denominated in currencies that no longer exist, such as the French franc, Swedish and Danish krona, which have since been replaced by the euro. The appendix details the debt and the value of the premiums to be paid in the original currency and does not include converting the total into currency, such as dollars or euros, but Guzmán said the agreement includes payments for the equivalent of 430 million US dollars.

What is more, The Minister will participate tomorrow in Paris in the ministerial meeting of the International Energy Agency Which will bring together the highest energy authorities of the leading countries, to coordinate actions in the context of the global energy crisis. He will also hold meetings with companies in the energy sector, such as last week in Houston, after the strong confrontation with the Minister of Energy, Dario Martinez, over gas money for the upcoming winter, according to what was reported by this medium.

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