The Argentine government confirmed on Friday that the Paris Club of creditor nations have invited the country to start formal negotiations towards the end of May, apparently following on the proposal made by the Cristina Fernandez administration last January.
Earlier in the day the Paris Club announced the negotiations invitation for the week starting 26 May with the purpose of settling the long-running debt estimated roughly in 10bn dollars.
They discussed this proposal in January and February, asked for clarification and, based on a revised proposal, have invited the government of Argentina to come negotiate an arrears clearance agreement with the Paris Club creditors in May in Paris, secretary general Clotilde L'Angevin was quoted in Paris.
From Buenos Aires the economy ministry under Axel Kicillof said that our proposal seeks to develop investment inflows with the objective of confronting new challenges, after a period of 10 years of high and sustained economic growth.
An arrears clearance agreement is not the usual debt rescheduling based on an IMF program. It would cover principal, interest and late arrears. In the absence of an IMF program, which Argentina has ruled out, Paris Club rules forbid any reduction in the value of the country's debt.
Germany is Argentina's biggest Paris Club creditor with about 30% of the debt, followed by Japan with about 25%. Smaller holders include the Netherlands, Spain, Italy, the United States and Switzerland.
Speaking this week before a congressional committee US Secretary of State John Kerry revealed that the sum owed by Argentina in the framework of the Paris Club was 600 million dollars.
A deal with its creditors for a settlement would help open up new sources of international funding for Argentina which has been shut out of capital markets for more than a decade since its default in 2001.
Argentina and Paris Club members came close to striking a deal in 2008 but the government pulled out at the last moment, concerned about its falling foreign exchange reserves in the midst of the global financial crisis.
With its dollar reserves dwindling, Buenos Aires has been eager to secure a deal that does not put too much strain on its balance of payments.
Argentina's debt to the Paris Club is a legacy of its 2001-02 economic crisis, which culminated in a roughly 100 billion dollars debt default. The country's history with the informal group of mostly Western nations goes back to the Paris Club's origins in 1956, when Argentina agreed to meet its public creditors in Paris.
Under the scheme presented by minister Kicilloff last January in Paris Argentina would pay arrears with sovereign bonds, beginning 2016, but also wants those countries to invest similar sums in Argentina.
Apparently Japan is demanding full payment cash and Germany could accept several payments but both countries insist that the IMF must be involved, as explicitly established in the Paris Club charter.