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The IMF trusts that Argentina reaches an agreement with "a high participation of creditors"

2020-05-07T14:33:03.084Z


The agency's spokesman said the plan should restore debt sustainability. Tomorrow, Friday, the deadline for bondholders to accept or reject the official offer expires.


Paula Lugones

05/07/2020 - 11:08

  • Clarín.com
  • Economy

The International Monetary Fund said it is confident that Argentina can reach "an agreement with a high participation of creditors", one day before the deadline for bondholders to respond to the government's debt restructuring offer.

In a virtual press conference in Washington, the organism's spokesman, Gerry Rice, pointed out this Thursday that the negotiation between the Argentine authorities and the bondholders is "a bilateral matter that corresponds to Argentina and its creditors and the IMF does not participate directly" in them, a practice that is common in all countries.

Rice added, however: "We are confident that an agreement can be reached with a high participation of creditors, that the sustainability of the debt can be restored with a high probability ."

And he added: "We are ready to help Argentina , particularly in these difficult circumstances, when the Government is trying to face the effects and consequences of the coronavirus and carry out a plan that will restore sustainability and inclusive growth in the medium term" .

The words of the Fund come a day before the deadline set by the Government for the closing of the offer it made to the bondholders, which takes place this Friday.

In February, after the first technical mission in Argentina under the government of Alberto Fernández, the Fund had established that the country's public debt "is not sustainable" and demanded an "appreciable" withdrawal from private creditors. The government said it would pay the debts when the country began to grow.

In its initial offer, Argentina presented reductions of 5.4% of capital and 62% of interest, plus a three-year grace period. The main creditors have already announced their rejection of the terms of the proposal, while Minister Martín Guzmán asks them to present a counteroffer. Under certain clauses, the restructuring would have to be accepted by 65 or 75% of creditors (depending on the bond) for it to take effect.

In a conference organized by Columbia University on Wednesday, Guzmán emphasized that they would remain "absolutely flexible" to hear a counterproposal, noting that "there are multiple combinations of parameters" that creditors could present. "There is always a chance to learn," he added. "If we hear from creditors a different combination of factors, but that respects the parameters of sustainability, we can reach an agreement," he said.

Argentina did not pay maturities of bonds for US $ 500 million on April 22, so if it does not cancel them or reach an agreement with creditors before May 22, it will default.

The government debt offer received strong backing from the international academic community on Wednesday with the publication of an open letter from 138 renowned economists from 20 countries , including Nobel laureates Joseph Stiglitz and Edmund S. Phelps. Experts called on Argentine bondholders to take a "constructive approach " to the debt restructuring proposal.

"The responsibility falls on the private creditors to act," says the letter, also signed by other renowned experts such as Jeffrey Sachs, Carmen Reinhart and Thomas Piketty. "Argentina has submitted a responsible offer to creditors that reflects the country's ability to pay and is in line with the IMF's technical analysis."

Asked if the Fund endorsed the content of the letter, Rice said the agency "does not participate directly " in the negotiations and avoided referring to the content of the letter.

Source: clarin

All business articles on 2020-05-07

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