Thanks to the agreement with the Paris Club of creditors, to postpone the payment of two billion dollars to 2022, Argentina won the time in negotiations with the International Monetary Fund (IMF) on enormous external debt. As Reuters reports, the payment of the payment gives a chance to the country to avoid the tenth, anniversary collapse of the economy, how could the default be (rejection of payments) under government obligations.
As part of this transaction, Argentina must pay $ 430 million to creditors to March 2022 and agree with the IMF on the refinancing of debt $ 45 billion.
Argentine traders consider an agreement to be profitable, since the postponement of payments to the Paris club and negotiations with the IMF will help avoid shocks during elections to the local parliament on November 14. However, this term will have to pay the IMF 2.6 billion dollars – it is under such conditions that the organization approves this transaction.
Amherst Pierpont Analyst Sioblan Morden said that “the risk of a breakdown of the transaction with the IMF is now almost equal to zero,” even despite the obligation of Buenos Aires to return $ 8.5 billion to the beginning of the next year.
It was originally planned that Argentina agree with the IMF to refinance debt at the beginning of this year, but negotiations disrupted the start of a pandemic coronavirus and tensions within the ruling coalition over the terms of the deal.
According to some analysts, even after reaching agreements with the IMF, Argentina will have a lot of problems, given the growth of poverty, hyperinflation and capital control.
Argentina is struggling with an external debt crisis since 2019, when the sharp collapse of the market provoked outflow of reserves and a sharp drop in the peso. Last year, the country declared the ninth default in its history, when it was not able to pay debt of $ 500 million on external bonds. After time, it was possible to agree on restructuring for more than 100 billion dollars, but this was affected by relations with creditors.