The Argentine government will issue bonds worth US$5 billion to be auctioned this week to pay back debt from imports during the previous Cristina Fernandez administration, according to a resolution published by the current government.
The figure marks a 150% increase on the US$2 billion that president Mauricio Macri’s administration had estimated for the bond issues, but it is still less than the most pessimistic government estimates of the debt held with importers.
Agriculture Minister Ricardo Buryaile said earlier this week the government owed US$10 billion to importers.
The Bonar 2016 bonds issue offers a six percent interest rate and will be paid out in eight monthly installments between May 2016 and December 2016. The bonds will be issued under local legislation, keeping them safe from any possible court action by holdouts or “vulture” funds trying to block their payment.
Subscribing to the bond will be optional for all those who are owed money. The government is also offering importers the alternative option of scheduled cash payments.
Macri’s administration also gave further details on how the new system of imports that was made official last week will operate. Production Minister Francisco Cabrera said that “sectors such as textiles, footwear, spare auto parts, metals and toys will still be safeguarded by the system.”
The new Integral System for Import Monitoring (SIMI) will keep 1,400 types of products under a system that does not issue automatic import licences in order to protect local businesses. However almost 90% of products will be allowed into the country automatically, Cabrera said.
The new administration argued that previous restrictions were largely in place to artificially prop up the country’s trade balance. Former Economy minister Axel Kicillof, meanwhile, has fired back at that criticism saying that it is normal for the Central Bank to not pay importers right away.