The Government reached an agreement with the Paris Club to defer debt payments until September 30, 2024, while progress is made on an understanding that includes a new mechanism for repayment of commitments, a condition that will be established in a DNU that It will be issued “imminently,” official sources confirmed to Télam.
Anyway, The Government’s objective is to reach a renegotiation “before June 30, 2022” -deadline set in the last visit of the Minister of Economy, Martín Guzmán, to Paris-, in which new conditions of interest rates, terms and incorporation of the US$ 430 million already paid in two installments in February 2022 and July 2021.
“The new decree sources explained. “It allows to formalize this regulatory time to work on these negotiations and establish that Argentina defers payments until 2024 or until a new agreement with the Paris Club, whichever comes first.”
“Argentina’s objective is to renegotiate the agreement and find better conditions for the country as soon as possible. The expectation and what we are working on is to finalize the renegotiation with the authorities before June 30,” they detailed.
The date of September 30, 2024 is due to an agreement between both parties, knowing that the Extended Facilities agreement signed with the IMF grants that date as the maximum term, although the goal is to close the understanding much earlier.
Currently, the Government is working on negotiations with each of the creditor countries and with the Club’s authorities to come up with a new repayment scheme.
On May 31, 2021, Argentina had to face a payment of close to US$ 2,450 million -corresponding to 40 credits granted by 14 countries and in 8 different currencies- under the terms of the Agreement signed in 2014, which contemplated a grace period of 60 days.
Nevertheless, On June 22, 2021, Minister Guzmán announced that he had reached an understanding with the Club to obtain a time bridge that would allow Argentina not to fall into default and continue with the negotiation.
According to Guzmán, “paying that amount would have been a blow to international reserves and therefore would have generated more exchange rate instability. and more macroeconomic instability”.
That understanding was sealed through Decree 412/2021, in which the Government set a deferral of the Framework Agreement and the Bilateral Agreements signed with the countries in the Paris Club until May 31, 2022.
The new DNU -which will be published imminently- is the one that will extend the term of the agreement, to comply with the legal conditions that DNU 412/2021 itself had set.
In any case, on March 22 of this year, Minister Guzmán and the president of the Paris Club, Emmanuel Moulin, had announced a new period of negotiations until June 30 of this year to reach a new agreement, while negotiations continued. negotiations with the IMF to agree on a sustainable program consistent with the country’s macroeconomic stability objectives.
Since then, two payments have been made, on July 28, 2021 and February 28, 2022 for a total of US$430 million in principal, which were in accordance with the disbursements made to other bilateral creditors, while progress was made. negotiations with the IMF.
The capital balance, terms and interest will be defined in the negotiation in which Argentina is now advancing in parallel with the Club authorities and the 16 member countries, which will be set under the terms of a new agreement, which will no longer have as based on the 2014 understanding.
“If the new agreement established payments during 2022, those amounts would be deducted from the reserve accumulation goal, established in the Expanded Facilities Program signed with the International Monetary Fund,” as explained by official spokesmen.
According to the annex to Decree 412/2021, Argentina must renegotiate the payment of nearly US$2.5 billion that it owes to 24 agencies and banks from 16 countries: Germany, Spain, France, the United States, Belgium, Denmark, Austria, Canada, Israel, Italy, Japan, Sweden, Switzerland, the United Kingdom, and the Netherlands.
