Argentina to continue talks with creditors after deadline

Argentina was on Friday expected to continue negotiations with its international creditors even after the passing of the deadline for its debt restructuring proposal, local media reported.

Financial market experts had said there was “an important level of acceptance” of Argentina’s offer, but there was no immediate information on the position of large investment funds, which will determine the outcome, the national news agency Telam reported.

The news website Infobae said most bondholders had rejected the proposal. The newspaper Ambito said investors were preparing a counter-offer. President Alberto Fernandez’s government has said it is open to dialogue.

The proposal for restructuring about 65 billion dollars’ worth of Argentine sovereign bonds includes a three-year moratorium on payments, a 62-per-cent cut in interest payments and 5.4-per-cent reduction in the main payments.

A failure to reach an agreement would threaten the South American country with state bankruptcy.

Argentina was in a deep economic crisis already before Covid-19 hit its economy.

Inflation is running at more than 50 per cent and the International Monetary Fund (IMF) expects the economy to contract by 5.7 per cent this year.

The government has argued that more than 20 per cent of its revenues could go into debt payments, making it impossible for it to honour them.

However, three key groups of creditors rejected the debt restructuring offer on Monday, saying it would require Argentinian bond holders to bear disproportionate losses.

But 138 economists from 20 countries, including Nobel laureates Joseph Stiglitz and Edmund Phelps, backed Argentina’s proposal as “responsible” and as adequately reflecting the country’s payment capacity.

Read also: Taliban blow up police chief in latest Afghanistan attack

“Debt relief is the only way to combat the pandemic and set the economy on a sustainable path,” the economists wrote, pointing out that urban poverty in Argentina had stood at more than 35 per cent already in 2018.

Argentina has a long history of debt defaults, experiencing the eighth one in 2001. If no agreement is reached, it is due to officially go into default on May 22. (dpa)