Argentina will seek a new programme with the International Monetary Fund whatever the outcome of talks with holders of its US$65 billion of defaulted overseas bonds, according to Economy minister Martín Guzmán.
Guzmán has also reiterated that the country has reached its upper limit in what it’s prepared to offer creditors, though he said the government would consider improving the legal terms of the offer.
“After the debt restructuring process with the private creditors, we expect to request a new IMF programme that replaces the previous one that didn’t work,” Guzman told Bloomberg in a television interview on Tuesday. “This is going to happen regardless of what happens with private creditors.”
Argentina, which is at a crucial point in its bond restructuring process, also has on hold a US$56-billion stand-by IMF agreement negotiated by the previous administration. The government is working on plans to boost tax revenue and curb the fiscal deficit, though this will take longer than the country and the IMF originally projected due to the pandemic, Guzmán said.
“Fiscal consolidation has to occur to a pace that allows the economy to recover, and to sustain that recovery,” he said.
Argentina faces an August 4 deadline with its proposal to restructure its overseas debt after falling in default this year for the ninth time in the country’s history.
“We significantly improved the offer, and we reached a point that is the maximum effort Argentina can make without compromising the social course we are trying to achieve,” Guzmán said, echoing comments made recently by President Alberto Fernández. “We have made a massive effort.”
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The country still doesn’t have the support of the three main creditor groups, which say they represent holders of more than 50 percent of Argentina’s overseas debt after joining forces with other funds this week. The latest creditor proposal demands a net present value about three cents per dollar above current government offer of about 53 cents, according to a Goldman Sachs Group Inc. report.
The groups originally included funds such as BlackRock Inc., AllianceBernstein and Monarch Alternative Capital LP, and now includes BlueBay Asset Management LLP, Fidelity Management & Research Co and Amundi Asset Management, among 30 firms that have joined forces.
Whatever the outcome, Argentina will spend a long time without issuing new foreign-denominated debt, Guzmán said.
“We don’t expect to tap the international markets for a while,” he said.
by Jorgelina do Rosario, Bloomberg