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Montevideo, January 29th 2023 - 22:22 UTC

 

 

Argentina clinches agreement with Paris Club

Saturday, October 29th 2022 - 10:48 UTC
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The new deal will help cut down Argentina's economic and financial imbalances The new deal will help cut down Argentina's economic and financial imbalances

Argentina's superminister Sergio Massa Friday announced a deal had been reached with the Paris Club for the repayment of Argentina's debt amounting to US$ 1.972 billion.

Although there was no capital reduction, unthinkable as per Paris Club by-laws, “fines and penalties” were eliminated and the loan was extended from 2026 to 2028 at a lower interest rate (from 9% to 3.90% in the first three semesters of the agreement and 4.50% afterward).

“Today we have successfully completed for Argentina the agreement with the Paris Club to return to normalize the relations of our country, of our companies, for our workers, with the countries of the European block,” Massa said.

“This understanding is a solution to the problem of interruption of payments under the 2014 agreement,” which was to have been paid off by May 2019. The new deal is expected to allow the recovery of economic stability and open possibilities for bilateral financing of infrastructure projects and export promotion, Economy Ministry sources told local media in Buenos Aires.

The announcement was made after negotiations carried out in Paris by Economy Ministry head advisor Leonardo Madcur and National Institute of Statistics and Census (INDEC) Chief Marco Lavagna with Paris Club Secretary-General Emmanuel Moulin -also France's Secretary of the Treasury- and his team.

The new agreement will also allow Argentina to advance in energy investments and benefit foreign companies already in the country, after hindrances in the flow of investments have been removed, thus facilitating access to global financing.

Massa also pointed out that through this new deal Argentina will “advance in the consolidation of its relationship with Europe.”

The understanding was sealed through a teleconference between Massa and Moulin. It modified the May 29, 2014, Joint Statement on the debt defaulted in 2002, signed by current Buenos Aires Province Governor Axel Kicillof, who was Economy Minister back then under Cristina Fernández de Kirchner. The deal solves problems stemming from an interruption in payments in 2019 under President Mauricio Macri.

The Paris Club said that the new agreement was “consistent with the parameters of the IMF program, with respect to long-term debt sustainability” and brought about a “sustainable solution to the issue” while reducing Argentina's economic and financial imbalances.

The Argentine government is committed to “obtain the provision by its other official bilateral creditors of new disbursements in line with the assumptions of its financial program” the Paris Club explained in a statement.

 

Categories: Economy, Politics, Argentina.

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