Argentina is still planning to use its foreign exchange reserves to repay defaulted debt to the Paris Club of creditor nations, according to the club's chairman Xavier Musca.
Argentine media have speculated that Argentina might roll back on its promise to repay the debt in one go, using foreign exchange reserves that might be needed to support the economy amid the international financial crisis. "They are still on the line of wanting to repay their debt," Musca said after meeting Argentine officials over the weekend on the sidelines of a meeting of financial officials from the G20 taking place in Brazil's business capital Sao Paulo. Finance officials and central bankers from the G20 group of advanced and emerging economies met to hammer out proposals on how to combat the crisis over the weekend. According to Musca, Argentina and the Paris Club were having discussions about precisely how much money was owed to which countries. The 6.7 billion US dollars earmarked for repayment consists of arrears dating back to Argentina's 2001-2002 economic crisis. The Paris Club estimates Argentina's total outstanding debt at around 7.9 billion. The difference between the two figures included debt that did not need to be repaid immediately. Paris Club rules stipulate that if a repayment on defaulted debt is made, it must be done in one go. Paying off the debt could make it easier for Argentina to raise new loans after its debt default. But local bonds and the stock market have been hit hard by uncertainty that has plunged emerging markets and spurred demand for safe-haven dollars. Argentina has around 47 billion USD of international reserves with the central bank. Creditor nations which could expect to be repaid for the arrears included Germany, Japan, Spain, the Netherlands, France, the United States, Italy and Switzerland.