Argentina will seek a new program with the International Monetary Fund whatever the outcome of talks with holders of its US$ 65 billion of defaulted overseas bonds, Economy minister Martin Guzman said.
Guzman also reiterated that Argentina has reached the upper limit in what it’s prepared to offer creditors, though said the government would consider improving the legal terms of the offer.
“After the debt restructuring process with the private creditors, we expect to request a new IMF program that replaces the previous one that didn’t work,” Guzman said in an interview on Tuesday. “This is going to happen regardless of what happens with private creditors.”
South America’s second-largest economy, which is at a crucial point in its bond restructuring process, also has on hold a US$ 56 billion stand-by IMF agreement negotiated by the previous administration. The government is working on plans to boost tax revenue and curb the fiscal deficit, though due to the pandemic this will take longer than the country and the IMF originally projected, Guzman said.
“Fiscal consolidation has to occur to a pace that allows the economy to recover, and to sustain that recovery,” he said.
Argentina faces an Aug. 4 deadline with its proposal to restructure its overseas debt after falling into default this year for the ninth time in its history.
“We significantly improved the offer, and we reached a point that is the maximum effort Argentina can make without compromising the social course we are trying to achieve,” Guzman said, echoing comments made by president Alberto Fernandez. “We have made a massive effort.”
Fernandez said on Tuesday that the government will support its citizens in need as long as the coronavirus pandemic exists.
“All creditors should know that we are not going to leave any Argentine behind to pay a debt we cannot afford,” Fernandez said in a webcast event from the presidential residence during a hospital inauguration in Buenos Aires province.
The country still doesn’t have the support of the three main creditor groups, which say they represent holders of more than 50% of Argentina’s overseas debt after joining forces with other funds this week. The latest creditor proposal demands a net present value about 3 cents per dollar above current government offer of about 53 cents, according to a Goldman Sachs Group Inc. report.
The groups originally included funds such as BlackRock Inc., AllianceBernstein and Monarch Alternative Capital LP, and now includes BlueBay Asset Management LLP, Fidelity Management & Research Co. and Amundi Asset Management, among thirty firms that have joined forces.
Whatever the outcome, it’ll be a long time before Argentina issues new foreign-denominated debt, Guzman said. “We don’t expect to tap the international markets for a while,” he underlined.