MercoPress. South Atlantic News Agency

Argentina in France trying to work out a debt deal with the Paris Club

Minister Kicillof and his team of young economists are negotiating payment terms for the 9.5bn dollars debt

Desperately credit-short Argentina outlined on Monday its conditions for repaying some 9.5 billion dollars in debt to the Paris Club, a senior official at the group of creditor nations said, as the government of President Cristina Fernandez seeks to revive long-stalled talks. Argentina's international reserves have fallen to its lowest level since 2006.

 Argentine Economy Ministry led by Axel Kicillof issued a statement saying the meeting “consolidated the possibility of advancing negotiations.”

Kicillof sketched terms for a formal repayment offer in talks in Paris with Club President Ramón Fernández, its secretary general Clotilde L’Angevin said.

“It’s not yet a formal proposal, they are main principles that could serve as the basis for a proposal” Ms L'Angevin said adding that the Club’s members would discuss the talks at a regular monthly later this week.

“It’s not yet a formal negotiation process, the discussions between Argentina and the Paris Club are part of an ongoing process,” she added.

With Argentina signaling it wants to settle disputes with its creditors, Paris Club members have been eager to get a concrete proposal for the debt to be repaid over a period of time to be determined in negotiations. Paris Club members Germany and Japan together hold about 60% of the outstanding debt to the group of creditor nations.

Kicillof arrived to Paris on Sunday alongside Finance Secretary Pablo López and former Economy minister Hernán Lorenzino, who is now in charge of the country’s debt repayment efforts. The official was also joined by former Finance secretary and current member of the Debt Restructuring Unit Adrián Cosentino.

From Buenos Aires cabinet chief Jorge Capitanich said that: “any negotiation with the Paris Club must respect the country’s national interests and its ability to pay”

“This is the basic condition for negotiation the country has, and that is the position the minister Axel Kicillof will establish” Capitanich said in his daily press conference in Casa Rosada.

Capitanich suggested that Argentina’s capacity to repay foreign debt would improve after big payouts already planned for this and next year. Argentina's debt payments would reach 5.5 billion dollars this fiscal year and slightly more next year before the burden eases in from 2016 to 2019, the Cabinet chief said.

However the Paris Club wants to be reimbursed in full in order to avoid creating a precedent for other countries that owe its members money, and Argentina for its part wants a breakthrough deal with the group of sovereign creditors because it needs to open up new sources of international funding after being shut out of capital markets for more than a decade since its 2001/02 default.

Argentina is largely locked out of international bond markets as the country awaits a final ruling in a case against a number of hedge funds that are suing Argentina in US courts for full repayment on defaulted sovereign bonds.

The Cristina Fernández administration has recently taken steps to mend ties with international creditors. Months ago, the country paid about 500 million to settle disputes with five investors and started talks with Spanish oil firm Repsol to compensate it for the seizure of its majority stake in YPF, the country’s largest oil company.

With foreign-currency reserves of the Central Bank (BCRA) at their lowest since 2006 and falling quickly, Argentina wants a deal with the Paris Club that does not put too much strain on its balance of payments.