05/14/2021 10:08 AM
Updated 05/14/2021 10:08 AM
The group of wealthy government creditors known as the Paris Club is
willing to delay a $ 2.4 billion debt payment from Argentina due
this month if the country meets
, potentially avoiding a damaging default, according to three people with direct knowledge of the negotiations.
The Club will prevent Argentina from falling into default if it does not meet the May 31 payment,
in the hope that the country can renegotiate the $ 45 billion loan with the International Monetary Fund,
one of the people said, who asked not to be named because the conversations are private.
An agreement with the IMF may not come
until after Argentina's midterm elections
later this year, the person said, declining to specify the
conditions the group is demanding.
The Paris Club secretariat declined to comment, citing its policy of not publicly discussing the ongoing negotiations.
The press office of the Argentine Ministry of Economy did not immediately respond to the query.
President Alberto Fernández extended his European tour to meet with IMF Managing Director Kristalina Georgieva in Rome on Friday in an attempt to gain
support for a delay and renegotiations with the IMF
Argentina has formally asked the Paris Club for
more time to make the payment
and expects to receive a response
by the end of the month.
The call is to reach an agreement as soon as possible
, we think that we cannot think of an agreement that requires greater efforts from the Argentines," said Fernández after the meeting, which lasted
more than an hour
in a meeting room at the Sofitel hotel. from Rome.
The yield on Argentine dollar-denominated bonds maturing in 2038 barely changed on Friday, standing at 14.3%.
The peso has lost nearly 11% this year
second largest depreciation
among emerging market currencies.
The expiration with the Paris Club comes at a difficult time for the government, with the country in its third year of recession, inflation approaching 50% and unemployment above 10%.
Although analyst estimates of its
vary, some estimates place them
since September 2020,
limiting Argentina's ability to meet its international obligations.
The temporary exemption is intended to alleviate the economic havoc caused by the pandemic, but must be
tied to conditions so that it does not become a habit
, one of the sources said.
Argentina has defaulted on its foreign debt nine times in its history.
"Nobody wants Argentina to be an international pariah again," said Rodrigo Olivares-Caminal, professor of banking and finance law at Queen Mary University of London.
"A default would be negative for Argentina and its creditors. But I am concerned about the endemic problem of Argentina's balance of payments." In May 2014, Argentina reached an agreement with the Paris Club to pay a debt of 9.7 billion dollars after 13 years of default. The debt was supposed to be paid off over a five-year period, but the country's latest financial troubles
delayed final payments due this month
. Creditors include the
UK, Italy, Spain and Canada.
A Paris Club rule known as the "conditionality principle" states that the group only negotiates debt restructuring with debtors who have
"a proven track record of implementing reforms under an IMF program
according to the website. of the group.
Argentina stopped following the guidelines of a program with the IMF after a change of administration in late 2019, and talks for a new plan have stalled.
Point by point, what does Alberto Fernández ask of the Monetary Fund
Alberto Fernández met with Kristalina Georgieva: "The vocation is to find an agreement as quickly as possible"