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ECONOMY | 28-10-2022 15:50

Sergio Massa: Argentina has reached debt agreement with Paris Club

Economy minister Sergio Massa says government has "successfully" reached an agreement with the Paris Club to restructure just under US$2 billion in debt.

Argentina's Economy Minister Sergio Massa announced Friday that the government has "successfully" reached an agreement with the Paris Club group of creditors to restructure the nation's outstanding debt.

At a televised event with business leaders in Escobar, Buenos Aires Province, Massa said the agreement paves the way for Argentine firms to access credit from European institutions.

"Today, we have successfully closed the agreement with the Paris Club to return our country's relations with the European bloc to normal," said the minister, who said it would allow Argentina to "normalise the relations of our country, of our companies, of our workers, with the countries of the European bloc."

According to the head of the economy portfolio, "we have to be credible but firm in defending Argentina's interests."

"Many companies here were denied access to credit in Europe and trade with companies from the European bloc because we were still in negotiations with the Paris Club," he said.

Argentina's negotiations with the Paris Club, over a debt of just under US$2 billion, have dragged on for years while, at the same time, the country has engaged parallel negotiations with the International Monetary Fund for a new financing programme. 

The two sides amended earlier repayment agreements "to clear the remaining debt in arrears due to the Paris Club creditors over a six-year period" running until 2028, the Paris Club said in a statement.

"The scheme offers a framework for a sustainable solution to the question of arrears due by the Argentine Republic to Paris Club creditors, covering a total estimated stock of arrears of US$1.972 billion," it added.

Repayment would now be made in 13 semi-annual instalments, the first due in December this year and the last in September 2028, said the club.

President Alberto Fernández's government reached an agreement with the IMF in March earlier this year to restructure more than US$44 billion in debt, but changes at the helm of the economy portfolio in July further complicated talks with the wealthy group of nations.

The country is battling high inflation of 66 percent so far this year.

Under the IMF deal, Argentina must boost its international reserves and reduce the fiscal deficit from three percent of gross domestic product in 2021 to 2.5 percent this year, 1.9 percent in 2023 and 0.9 percent in 2024.

"We are a financial debtor country but an environmental creditor, we are one of the countries that guarantees global food security. We are one of the first countries that had to tolerate the impact of the war [in Ukraine] on its economy," said Massa.

"All we have to do is to value our development model," he stressed.

A mission team from the Economy Ministry is currently in Paris to finalise the details of the agreement. Massa was previously expected to travel to Europe in October to continue negotiations, but that trip was postponed to November.

 

– TIMES/BLOOMBERG/NA/AFP

 

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