Argentina has agreed with its creditors to reschedule $ 66 billion of debt, saving it from impending bankruptcy for the time being. The country is granted significant debt relief through the restructuring of outstanding debt, the Ministry of Economy said in Buneos Aires.
The conditions of the previous offer for the creditors have been improved by adjusting the payment dates for the bonds. The move was a "significant relief" for highly indebted Argentina. According to the ministry, the agreement was reached with three groups of creditors.
Argentinian President Alberto Fernández spoke of "a streak of light on the horizon" and welcomed the solution to "an impossible debt in the midst of the greatest economic crisis that can be remembered and in the midst of the pandemic".
The debts related to the negotiations with the creditors make up about a fifth of the total Argentine public debt. It has now also been agreed that Argentina will change its payment modalities. Payments are now scheduled for January rather than March each year, the Ministry of Economy said.
No agreement before in negotiations
No agreement had previously been reached in the negotiations. Argentina had last offered creditors in the three months' negotiations to repay $ 53.5 for a hundred dollars borrowed. The creditors - including the three groups Exchange Bondholders, Ad Hoc and Argentina Creditor Committee in particular - claimed $ 56.5 per $ 100 debt. According to government officials, the agreement now provides for over $ 54 and changed payment terms. Argentine government bonds rose after the deal became known.
The South American country declared bankruptcy for the ninth time in May, and failed to pay $ 503 million in interest claims. Since then, the government has tried to persuade creditors to waive a significant portion of their claims.
Last inflation rate of more than 50 percent
One reason for the national debt is the economic emergency. Argentina is in a serious financial and economic crisis. The inflation rate was more than 50 percent recently. For the current year, the International Monetary Fund expects the economy to shrink by 9.9 percent of its gross domestic product due to the corona pandemic.
Argentina recently had $ 323 billion in debt. The country had already gone bankrupt in 2001 after it had stopped servicing its debts. After that, the government had agreed with most donors on debt relief and bond exchanges. At that time, several hedge funds bought the bonds at comparatively low prices, but refused to cut their debt. An agreement after many years of litigation ultimately cleared the way for Argentina to regain a foothold in the international credit markets. From 2015 it was able to finance itself again on the free capital market.