The government will send a bill to Congress outlining its plan to address the debt crisis and make payments “sustainable,” Economy Minister Martín Guzmán announced this week – and Peronist lawmakers are confident it will pass through Congress.
Frente de Todos lawmaker Darío Martínez said Friday he was optimistic the government’s “Restoration of the Sustainability of External Public Debt” bill would clear the lower house on Wednesday.
“I think we will have the necessary votes, more than enough,” said Martinez, the president of the Budget and Finance Committee.
The Kirchnerite deputy suggested that the Chamber of Deputies would clear the bill and send it to the Senate. He said “the current situation has made it impossible to pay the debt with these interests and maturities.”
That comments echoed those made by Guzmán in a high-profile press conference Tuesday. “We have a debt burden that is unsustainable,” the minister said, asking creditors for “time” and “good faith.”
The minister said Argentina was unable to pay down its debt under current conditions and would have to either alter maturity dates, interest rates or outstanding capital amounts. Exact details of the proposal will have to wait, he said, though the bill will cover foreign law bonds as well.
“The willingness is to pay, we have always said so. But in order to pay, the country needs to generate capacity, and for that we have to grow, and for that it is essential that there is a relief of the debt burden,” the minister told reporters. “We are taking firm steps to achieve that, but we don’t want to make promises that we cannot keep.”
The bill is a first step in Argentina’s efforts to restructure billions of dollars in bonds and loans with private creditors and the International Monetary Fund (IMF). Guzmán and President Alberto Fernández have have yet to unveil details of their strategy to renegotiate the debt, although Fernández recently said he wants talks to wrap up by March 31 because debt payments balloon after that date.
Speaking at the World Economic Forum in Davos earlier on Tuesday, economist Joseph Stiglitz said investors should brace for “significant haircuts” in Argentine debt. The Nobel laureate was Guzmán’s mentor at Columbia University.
Fernández, who took office on December 10, has inherited a public debt of some US$335 billion, the equivalent of 93 percent of the Gross Domestic Product (GDP), including a huge US$44-billion loan from the IMF.
The government won’t offer a bailout to Buenos Aires Province, which has US$250 million in debt due, Guzmán also confirmed. He asked creditors to show good faith by agreeing to a delay in order to give time for broad negotiations.
“We are maintaining our position that it doesn’t serve anyone’s interest to bail out the province. But the nation and the province are not in a position to pay the maturities,” Guzmán said.