Argentina Offered To Restructure The Debt To Investors
Argentina has proposed an $83 billion foreign debt restructuring plan in hopes of avoiding the ninth default in its history.
The proposal, announced on April 16 by Finance Minister Martin Guzman, suggests a moratorium on payments in 2020-2022. When payments resume in 2023, the government wants to lower the interest rate to 0.55% and then gradually raise it to 4.5% as the economy recovers. The government estimates that this will allow Argentina to reduce interest payments by 62%, saving almost $ 38 billion. Also, it is proposed to reduce the main debt by 5.4%, which will save about $3.6 billion more.
The proposal will be presented to creditors on Friday and they will have 20 days to review it, Guzman said. According to him, the parties are still far from an agreement. The new President of Argentina, Alberto Fernandez, has previously called the debt unsustainable. The country's economic problems were exacerbated by the coronavirus pandemic. The IMF forecasts that Argentina's GDP will shrink by 5.7% this year. "Right now, Argentina can't pay anything," Guzman said.
Investors doubt that holders of Argentine bonds will accept this offer, writes The Wall Street Journal. This is partly because almost half of Argentina's debt obligations in the next four years account for payments to the International Monetary Fund (IMF), from which it received $44 billion in financial assistance. On the restructuring of this debt, Argentina and the IMF have not yet agreed.