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ECONOMY | 04-06-2020 16:48

IMF remains 'hopeful' Argentina and creditors will agree debt deal

"We are hopeful that an agreement can be reached that will restore the sustainability of the debt," IMF spokesperson Gerry Rice tells reporters.

International Monetary Fund (IMF) spokesman Gerry Rice said Thursday that the agency remains "hopeful" that Argentina and its creditors will reach an agreement to restructure more than US$66 billion of debt. 

The government is seeking an agreement with creditors on debt issued in dollars in foreign legislation. This week, after a deadline expired last Tuesday expired, the Economy Minsitry extended negotiations until June 12.

"We are hopeful that an agreement can be reached that will restore the sustainability of the debt," Rice told reporters at a virtual press conference, reiterating the IMF’s support for Buenos Aires. 

Argentina fell into default on April 22, when it defaulted on just over US$500 million in interest payments due on three bonds that are involved in the potential swap.

Both sides have exchanged offers and counter-offers, and creditors now said to be awaiting a reformulation of the government's latest proposal, in an attempt to avoid going to court in a costly and lengthy process, as followed Argentina’s 2001 default. 

"As we have said recently, we are encouraged by the willingness of all parties to continue participating to reach a consensus," Rice added. 

Negotiations are now operating under the terms of a confidentiality agreement, introduced at the request of the Economy Ministry.

The government’s first proposal to creditors, which was rejected, included a three-year grace period on payments and a 62 percent reduction in interest and a 5.4 percent snip of capital.

Argentina comes to the negotiating table with an economy that’s been in recession for two years, with inflation remaining stubbornly high and poverty on the rise. In addition, a lockdown on citizens and businesses, imposed amid the coronavirus pandemic, has seen economic activity plummet. 

The government has repeatedly insisted that any debt deal must be “sustainable” and the IMF has echoed those sentiments, showing support for the Alberto Fernández administration’s stance.

Argentina owes the Fund US$44 billion, loaned as part of a record-breaking US$56-billion bailout provided by the IMF to the previous government, led by former president Mauricio Macri, in 2018.

 

– TIMES/AFP

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