The government agreed with the Paris Club to postpone the $2,000 million maturity date set for March 31
The Ministry of Economy Agreeing with the Paris Club on a new “time bridge” to avoid the March 31 deadline, which is the deadline for renegotiating the nearly US$2,000 million that Argentina owes to that organization. Thus, Argentina and the consortium of creditor countries announced that they would begin discussions to restructure the suspended balance as soon as the International Monetary Fund’s board of directors approved the new financial program.
As focal points, will be the new understanding between Argentina and those creditor countries A time window of two and a half years, which is the same Extended Facility for the Fund (EFF) that the government agreed with the IMF. This “bridge” does not mean that the state does not have to spend money for the Paris Club, but rather that You will do so “proportionately” to what you do to other bilateral creditors.
This was a demand from some club members, who demanded that this forum not have a fault in relation to another Argentine lender such as China, which is not part of this consortium. from here, If the country repays any credit to China, it must also do so in an amount proportional to the Paris Club countries.
This “bridge” would not mean that the country does not have to disburse the Paris Club, but rather that it will do so in a way that is “proportionate” to what it is doing to other bilateral creditors, such as China.
After that two-and-a-half-year window, there will be another race to be played in parallel: the substantive discussion on terms and interest rates until Argentina repays the nearly US$2,000 million outstanding with the Paris Club. There, as indicated by official sources Infobaethe “act” of both partiesEnd talks on the full renegotiation of that debt before June 30th.
“Argentina on June 22, 2021 committed to the Paris Club to reach an agreement with the International Monetary Fund before March 31, 2022. Thus, the country Achieved a time bridge, avoided tripping, and received a financial relief of US$2 billion With this group of creditors while continuing to negotiate with the Fund.”
According to Palacio de Hacienda, with this new understanding, “The country buys time and avoids exposing Argentina to default again. Wanted, After the conclusion of the agreement with the International Monetary Fund, the conclusion of the renegotiation of the “2014 Joint Declaration” with the Paris ClubIn this way, they will seek to change the payment terms that the government Christina Kirchnerwhen Axel Kisilo He was the Minister of Economy.
In addition, they considered that the agreement they negotiated Martin Guzman And the head of that forum Emmanuel Mullen“Represents support for the Extended Facility Program within two and a half years of its effectiveness.” In this sense, the French official “expressed his support for the program he has reached.”
Moving forward, both parties agreed To start soon the restructuring of $2,000 million It still has to be paid. They continued from Economy: “Argentina has already restructured its debt with private creditors, and now it is closing the refinancing with the IMF, and the next step will be to close the debt renegotiation process with the Paris Club.”
After that two-and-a-half-year window, the substantive discussion on the terms and interest rates for Argentina will begin to return the approximately US$2,000 million outstanding. The two sides seek to end the talks before June 30.
In any case, the government will have to continue to make partial payments while negotiations continue. “Argentina will only have to make partial payments to Paris Club members in proportion to the amounts it pays to other bilateral creditors.In accordance with the terms of the June 22, 2021 understanding, they concluded.
Paris Club: Who are the creditors and what Argentina is looking for
In 2014, the government of Christina Kirchner signed the Signing an agreement to return $9,690 million over five yearsas of May 2019. The total outstanding capital amounted to approximately $5,000 million, while the remainder (approximately $4,700 million) was generated from interest on these liabilities and penalties accumulated over the years.
I expected the exact imprint signed with the Paris Club, however, A window for an additional two years to repay those outstanding balancesalbeit at a significant additional cost. The interest at which this amount was updated became 9% per annumdouble the rate it was until 2019.
Martin Guzman It officially announced in February 2020 that it would seek to renegotiate the debt with the Paris Club. The Treasury Palace submitted a proposal to amend the terms of that 2014 agreement, and expected that it intends to discuss a file Extension of maturity dates and a “significant reduction” in the interest rate.
Currently, the Paris Club consists of Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Ireland, Israel, Italy, Japan, South Korea, Netherlands, Norway, Russia, Spain, Sweden, Switzerland, United Kingdom and United Stateswhich accounts for nearly 60% of global GDP.
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%).
More than half of Argentina’s debt to the Paris Club is concentrated in two countries: Germany (37%) and Japan (22%). It comes after the Netherlands (about 8%), Spain (6.68%), Italy (6.29%) and the United States (6.28%).
In the financial program with the International Monetary Fund, the government confirmed that “we will work with a view to reaching an agreement with Paris Club creditors on a schedule of repayment of obligations consistent with our ability to repay and the sustainability of debts.”
A series of forecasts included by the economy in the technical memorandum with the International Monetary Fund indicated that the executive branch Develop an advance budget to pay $760 million to this body It amounts to four installments of $190 million each: the first at the end of this month, the second at the end of June, the third in the last days of September, and the fourth at the end of the year.
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