The Government reached an agreement to refinance the debt with the Paris Club. “We have successfully completed the agreement with the Paris Club to normalize our country’s relationship with the countries of the European bloc”, indicated the Minister of Economy, Serge Massa. The agreement will allow refinance a debt by 1972 million dollars through semi-annual payments from this December to September 2028. The average fee half-yearly is 170 million dollars, between principal and interest.
“We are one of the countries that guarantees global food security, we are one of the first countries that had to tolerate the impact of the global war on its economy. And we are one of the countries that guarantee energy security and we have to do all of this worth,” Massa said, recalling that “Many of the companies here had credit prohibited in Europe.”
From the Paris Club they indicated that “this agreement is a continuation of the support provided for the approval by the IMF of the Agreement on Extended Facilities of last March 25 with Argentina and it is consistent with the parameters of said program in relation to the long-term sustainability of the debt“.
As evaluated by the Ministry of Economy, the agreement would unlock European investment in the energy and infrastructure works. Likewise, it would favor the approval of international credits from institutions linked to the European bloc.
the deal
The negotiation on-site they took her forward head of advisers to the Ministry of Economy, Leonardo Madcur, and the director of INDEC and adviser on international financial relations, Marco Lavagna, who held meetings in the French capital. Minister Massa closed the negotiation by telephone with Emmanuel Moulinpresident of the Paris Club and also secretary of the French Treasury.
On this occasion, the terms of the 2014 agreement with the Paris Club were renegotiated. During the years of repayment of said agreement, Argentina made minimum capital payments and interest payments for a total of 7,987 million dollars. In 2019, it interrupted its payments, leaving a balance of 1,972 million dollars. The remainder had been accruing interest at 9 percent.
The repayment by the Argentine State will be made over 13 semi-annual deposits. The first of them will take place in December of this year and the last in September 2028. In this way, the debt with the Paris Club, which had fallen irregularly in 2019, be back performing.
The rate, currently 9 percent per year, becomes a rate that starts at 3.9 percent in the first three installments and gradually rises. Throughout the entire repayment period, the weighted average rate is 4.5 percent. The deal involves financial relief of $248 million at present value, using a 10 percent discount rate on the $1.972 billion debt balance.
The agreement implies that in the next two years, Argentina will return 40 percent of the capital owed. “If the conditions of the 2014 agreement had been replicated for this understanding, in the next two years 58 percent of the capital would have been returned,” they indicated in Economy.
The Paris Club statement says that “during the meetings, the strong determination of the Argentine authorities to reduce economic and financial imbalances and to reach the objectives defined in the program of the Extended Facilities Agreement signed with the IMF”. It adds that “the Argentine government is committed to obtaining new credits from other creditors in line with the assumptions of the program with the IMF”.
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