Buenos Aires (AFP)

After more than three months of tough negotiations, the Argentine government announced on Tuesday that it had reached an agreement with its creditors at the last minute for the restructuring of 66 billion dollars of debt.

Argentinian center-left president Alberto Fernandez said he was "very happy for the country" and congratulated himself on having been able to restructure an "impossible debt" in the midst of "the worst economic crisis" and "in the midst of pandemic".

"Now we have a clear horizon to where we want to go," he added.

Securities under foreign legislation, the subject of negotiation, represent about a fifth of Argentina's total debt, which amounts to 324 billion dollars, or 90% of the gross domestic product (GDP).

Argentina finally reached an agreement with its creditors, of which three groups - Exchange Bondholders, Ad Hoc and Argentina Creditor Committee - had refused at the end of July the last proposal of the Argentine government.

This is "a significant relief" for the country, Argentina's economy ministry said in a statement, as the deadline for negotiations was set at 21:00 GMT on Tuesday.

"Argentina will adjust certain payment dates" from the government's original offer, which involves payments in January and not March of each year as originally planned, the statement said.

Discussions, underway since April 20, concerned bonds dating from 2005 and 2010, products of a previous restructuring, as well as new securities issued from 2016.

Buenos Aires notably proposed to pay $ 53.5 in recovery for every $ 100 of the face value of the bonds. The creditors demanded $ 56.5.

The new agreement provides for the collection by creditors of more than $ 54 per 100, and improves payment times, an official source told AFP.

- Bad posture -

This improvement makes it possible "to advance payments without yielding to the economic benefit," said analyst Sebastian Maril to AFP.

If the agreement "alleviates fears of a defeat in court, similar to that which followed the 2001 default, I doubt that it is enough to make Argentina's public debt sustainable in the medium and long term. ", however nuanced Nikhil Sanghani, analyst at the firm Capital Economics.

In 2001, with a historic default of $ 100 billion, the country experienced an unprecedented social and economic crisis.

The agreement announced on Tuesday is the result of three months of particularly tense discussions. Major creditors had threatened last week to exercise their veto, claiming to represent more than half of bondholders.

Despite the disagreements, both parties had made it clear that they wanted to avoid the consequences of a prolonged default.

Argentina was declared in default on May 22, which was due to pay interest of $ 500 million on three of the bonds under discussion. Despite the default, negotiations continued.

Last week, the South American country also failed to honor the payment of an additional $ 600 million in interest on two other bonds undergoing restructuring.

Argentina is in bad shape and the government's room for maneuver remains narrow: the economy, the third largest in Latin America, has been in recession since 2018 and will suffer even more this year due to the Covid-19 pandemic, with an announced contraction of 9.9% of GDP, according to the latest forecasts from the International Monetary Fund.

Inflation reached over 50% in 2019 and poverty is exploding.

The country must also negotiate a new program with the IMF from which it has subscribed a loan of $ 57 billion, of which $ 44 billion has actually been disbursed.

Another thorny issue for the government, the restructuring of the debt issued under national legislation of $ 41.7 billion, whose payments have been deferred to December 31, 2021.

© 2020 AFP