Argentina extends debt talks

President of Argentina Alberto Fernandez (left) meeting with the Director of the International Labour Organization. / December 9, 2019 / International Labour Organization (ILO – OIT – BIT) /Flickr / CC BY-NC-ND 2.0

The government of Argentina pushed the deadline to negotiate $65 billion debt restructuring back to May 22, according to Reuters.

Under the government’s proposal, there would be

  • a three year halt to payments,
  • a reduction of payments (also known as a “haircut), and
  • an extension of debt maturity beyond 2030.

Why it matters

Argentina has defaulted on its debt eight times in its 124 year history. The most recent default was in 2014 during the presidency of Cristina Fernandez de Kirchner, currently the Vice President. The current debt crisis comes during a global pandemic, a recession, and very high, persistent inflation.

What others are saying

Experts expressed skepticism of the government’s strategy in a recent article in Barron’s.

  • Hector Torres, a senior fellow at the Centre for International Governance Innovation and a former executive director at the International Monetary Fund, points to the new finance minister, Martine Guzman, as a source of the government’s harder line.
  • Alison Graham, chief investment office at Voltan Capital Management, criticizes the President Fernandez’s return to leftist policies.
  • Siobhan Morden, a specialist at Amherst Pierpont Securities, criticized the government’s proposal to cut coupon payments given its track record and the payments offered by other countries in South America.

Looking forward

The current deadline ends Friday, May 22, at 5:00 PM New York time. On May 24, more than $500 million in interest payments are due.

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