MercoPress. South Atlantic News Agency

Paris Club will study Argentina's repayment proposal; long process expected

A long and hard negotiation that might take several months, anticipated Kicillof

The Paris Club said it would study an outline from Argentina for repaying the more than 9.5 billion dollars it owes the group of creditor nations. Argentina is eager to resolve the problem of its outstanding debt with the group in order to regain access to international capital markets from which it has been shut out since its 2002 default.

 At a regular monthly meeting in Paris, the Paris Club's members discussed the general guidelines for repaying the debt, which Argentine Economy Minister Axel Kicillof laid out in Buenos Aires' first official communication with the group in years.

“The Paris Club creditors will study this proposal,” its secretary general Clotilde L'Angevin told the media.

”It is, however, too early to provide any feedback or reaction to Argentina on this paper that was transmitted to creditors only yesterday (Tuesday) evening,” she said.

With Buenos Aires 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.

From Paris and before flying back to Buenos Aires, minister Kicillof warned that the negotiation process with the Paris Club could take “several months”.

“It was a very satisfactory meeting where we presented the general guidelines, which are provisional and will be later followed by a formal offer with all the details included,” Kicillof said at a press conference on Tuesday. “This will be a long and hard negotiation that might take several months.”

In effect allegedly there are also questions about a possible haircut to the debt and a supposed demand of the Paris Club that part of the debt be paid in cash. Kicillof also rejected the intervention of the International Monetary Fund in the negotiations with the Paris Club, a supposed demand of the creditor nations, and explained the guidelines are based on three main concepts that have already been regularly applied in other debt restructuring processes.

“The guidelines are based on three concepts: we will fulfill the commitments taken up by previous governments, solutions offered need to have sustainability and we won’t accept constraints.”

Kicillof explained Argentina holds debt with 16 of the 19 countries in the group and said most of the debt was taken on by the last military government. Argentina’s debt with the Paris Club is one of the last remnants of the 2001-2002 economic crisis, which culminated in a roughly US$100 billion sovereign debt default.