Argentina reaches agreement with the Paris Club and avoids default in July

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Argentina reached an agreement with the Paris Club that will allow it to avoid a default on payments on July 31 and will entail a temporary relief of some 2,000 million dollars, the Minister of Economy, Martín Guzmán, announced on Tuesday.

“We have reached an understanding with the Paris Club to obtain a time bridge that allows us not to have to face a situation of default or default on July 31”, when the grace period to pay the last installment of debt of about 2.4 billion dollars with this group of creditors, Guzmán said at a press conference.

“Instead of facing the 2,400 million dollars that were programmed, it will face a set of payments that will add up to around 430 million dollars, which implies a financial relief for Argentina of 2,000 million dollars” in the immediate term , according to the minister.

That payment was the last tranche of a debt that had been renegotiated in 2014.

“Paying that amount would have been a blow to international reserves, it would have generated more exchange rate instability and more macroeconomic instability. On the other hand, a default, a situation of default, would also have been a blow to the economy,” said the minister.

Guzmán pointed out that the new payment dates are not yet fully defined, but it is likely that the first will be on July 31 and the second in 2022, without further details.

– Agreement with IMF –

“Argentina will have until March 31, 2022 to aim for a more permanent restructuring with the Paris Club and will continue to make efforts to reach an understanding with the International Monetary Fund,” the minister said.

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Argentina restructured last year some 66,000 million dollars of credits with private bondholders and since then has been conducting negotiations with the IMF for a new credit program to replace the one signed in 2018, for which it owes about 44,000 million dollars.

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