The negotiations to close a debt restructuring agreement for US$ 2,400 million that the country maintains with the Paris Club, was awaiting the appointment of the new head of the Palacio de Hacienda, after the resignation presented to the position by the Minister of Economy, Martin Guzmán, who was scheduled to travel to France this Monday. With the appointment of Silvina Batakis in his replacement on Sunday night, we will have to wait to see how the agenda planned by the Palacio de Hacienda is reformulated.
The formal meeting with the representatives of the Paris Club was scheduled for Wednesday, July 6.
During the first year of management under the presidency of Alberto Fernández, the outgoing official was in charge of restructuring the debt with private bondholders, which culminated in a historic swap of 99.75%, and subsequently achieved a renegotiation of the agreement with the International Monetary Fund for US$44,000 million.
Guzmán planned to travel to Paris with the approval of the first review of that program achieved with the IMF and the modification of the goals for the second quarter – without touching the annual goals – as a result of the impact of the war in Ukraine.
The agreement with the Fund and its fulfillment is key for the Paris Club, which had already given signs of cooperation with the country last March.
Guzmán’s agreement with the Paris Club
Days before the agreement with the Fund was approved, Guzmán and the president of the Paris Club, Emmanuel Moulin, had agreed on a new extension of the understanding reached in June 2021, which granted a term to face a new restructuring, in exchange for payments interest payments, and that it postponed the negotiation until the end of June.
This agreement also included financial guarantees from the Paris Club in support of the Extended Facilities program that lasts thirty months, allowing Argentina to secure the financial sources identified in the agreement with the IMF.
These financial guarantees establish that, during the term of the program, Argentina will make partial payments to Club members in proportion to those made to other bilateral creditors, in accordance with the terms established in the June 2021 understanding.
The negotiations of Argentina with the Paris Club acquire singular importance in the current international contextparticularly due to the acceleration of possible foreign direct investments in the energy area, slipped sources close to the negotiations.
The Government had reached an agreement at the end of last month with the Paris Club to defer debt payments until September 30, 2024, while progress is made on an understanding that includes a new commitment repayment mechanism.
Anyway, The objective of the Government is to reach a renegotiation that includes new conditions of interest rates, terms and incorporation of the US$ 430 million already paid in two payments in February 2022 and July 2021.
President Alberto Fernández, during his recent tour in Germanymet with the leaders of the G7, many of whom have direct weight in the negotiations with the Paris Club.
Until this Sunday, 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.
According to the schedule inherited from previous efforts, Argentina had to face a payment of close to US$ 2,450 million on May 31, 2021 -corresponding to 40 credits granted by 14 countries and in eight different currencies- under the terms of the Agreement signed in 2014 , which contemplated a grace period of 60 days.
The 2022 agreement allowed debt payments to be postponed until 2024 so as not to fall into default, and to give time to agree on a new interest payment scheme and rate renegotiationas the government wants.
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.
