Argentina’s economy minister, Martín Guzmán, warned bondholders to brace for significant losses as the country restructures its debt "focused on sustainability" amid an economic crisis. His comments at a congressional hearing on Wednesday set the tone for tense negotiations with sovereign debt bondholders, among them major investment funds such as BlackRock and Fidelity. He also said the government won't reduce its fiscal deficit in 2020.
A technical mission of the International Monetary Fund (IMF) arrives on Wednesday whose report will be a vital tool for reprofiling payments of $44 billion stand-by credit. That same day, the minister of economy, Martín Guzmán, will address Congress on his plan for "sustainable debt" renegotiation which also involves $67 billion owed to private bondholders. On Thursday, about AR100 billion of the AF20 Dual Bond mature.
The Argentine government informed the sovereign debt negotiation schedule indicating that it will present its restructuring offer in the second week of March. A round of informational meetings will follow and in the last two weeks of that month, the expiration, closing and settlement of the offer will take place. The Senate is expected to pass the debt sustainability law next week after receiving approval in the lower house.
Argentina Chamber of Deputies might approve today the so-called Debt Sustainability Bill that will grant powers to the Minister of Economy, Martín Guzmán, to negotiate the sovereign debt. Among those faculties is the determination of the final amount to renegotiate of a universe of $ 140 billion in the securities issued by Argentina under foreign law, which represent 44.9% of the total Argentine public debt.
Argentine Economy Minister Martín Guzmán arrived in New York to hold a series of meetings aimed at accelerating the renegotiation of external debt. His agenda for this week includes a presentation to the Council of Americas, and meetings with US Treasury officials, and with representatives of the International Monetary Fund.
Argentina national public sector registered in 2019 a primary deficit without extraordinary income of ARG$ 208.8 billion ($3.475 billion), equivalent to 0.96% of the Gross Domestic Product, said the Ministry of Economy. Computing extraordinary income, the deficit was ARG$ 95.122 billion (0.44% of GDP). The financial deficit amounted to ARG$ 933 billion ($15.32 billion), a figure equivalent to 4.28% of GDP. Sovereign debt interest payment amounted to 18.4% of the total public sector income.
International Monetary Fund Managing Director Kristalina Georgieva said in Davos the lender has had “very constructive” exchanges with Argentina’s new government and would do whatever possible to assist the indebted country. Argentina owes the IMF around around $44 billion and the severe economic crisis since last year has forced it to enter negotiations with creditors to restructure around $100 billion of sovereign debt.
Argentine representative Sergio Chodos takes office this week in Washington as the new director of the Southern Cone before the IMF. During meetings with Kristalina Georgieva and Luis Cubeddu, he will formally present President Alberto Fernández' proposal for paying off $ 44 billion of the stand-by credit agreed in 2018.