Daily Management Review

New Offer To Creditors To Be Offered By Argentina, To Extend Negotiation Conclusion Deadline


New Offer To Creditors To Be Offered By Argentina, To Extend Negotiation Conclusion Deadline
An improved offer will be made by Argentina to its creditors while also urging them to extent the negotiations for restructuring of its debts worth about $66 billion through the end of August. This was said by the Argentine President Alberto Fernandez during the weekend,
"The new offer will be made known today. It will be open until the end of August. It is an enormous effort we are making. It's the maximum effort we can make," Fernandez told radio Milenium.
July 24 was the previously set deadline for ending negotiations between Argentina and its bondholders. That deadline will now likely be expected till August 28 so that more time can be obtained by Argentina to come to an agreement for restructuring of bonds that it had issued to its bondholders under foreign law which is valued at $66 billion.
The debt because of the government bonds accounts for about one fifth of the total debt of the country which is at $324 billion. The total public debt of the country is about 90 per cent of its gross domestic product.
The government's latest offer should be published in its official bulletin and then presented to the Securities and Exchange Commission in New York.
The new proposal would be for "close to $53" for every $100, according to reports quoting a government source whereas the original offer was for $39 per $100. Bu that initial offer was grossly rejected by the bondholders.
While expressing hope that the negotiations will end well, Fernandez said that the conversations with creditors "are going well".
On the issue of interest rate reductions or grace periods, Argentina has yet to reach an understanding with creditors.
The Argentine economy has been in a spiral recession since 2018 and the novel coronavirus pandemic has further accentuated the pain for the economy. It is expected  that the Argentine economy will contract by 9.9 per cent this year according to the International Monetary Fund.
The government of Argentina has insisted that, with the support from the IMF, any agreement with its creditors should be sustainable which would allow the country to meet its obligations over the long term.
"If this is analysed rationally, what we are asking is not that (the creditors) lose, but that they stop earning what they earned in excess," Fernandez said, accusing his predecessor Mauricio Macri's government of agreeing to terms not seen anywhere else.