There is another detail that helps to understand: Germany owns 37% of the debt held by Argentina. That explains Scholz’s interest in pushing a quick resolution to this conversation and in receiving a “equal treatment” that is to say, that every time Argentina cancels debt with other creditors, it can dispose of proportional resources to gradually cancel the one it maintains with the Club. It was what Fernandez promised him again yesterday. To have a complete picture of the creditors, the rest of the debt is held by Japan (22%), the Netherlands (8%), Spain (6.7%), the United States (6.3%), Italy (6 .3%), Switzerland (5.3%), France (3.6%) and some other countries for the remaining 4%. Needless to say, the Paris Club members make decisions together anyway.
The fact is that President Alberto Fernández thinks that the Agreement closed in 2014 is bad for Argentina. For that reason he not only seeks an extension of the due dates, but also a strong reduction in the interest rate of the credit. Even today, the President believes that the effort must be put into clearing the coming years of debt maturities, so that the country can use the dollars to expand economic activity.
Going back to 2014, on that occasion, the Government had recognized to the Paris Club a debt of just over US$9,000 million (without removal of capital or punitive interest) and for which Argentina undertook to pay the entirety in a plan of five annual installments, with two more years of term. As a result of the pandemic, and the financial difficulties that were unleashed as of 2018, the loan, which should have been canceled in 2020, kept its last installment of about US$2.4 billion in force.
Strictly speaking, on that occasion, and with Guzmán’s renegotiation with private creditors underway, the government asked to use a mechanism to extend the obligation to pay that money for one year. It was then that Fernández and Guzmán decided to approach a proposal to modify the terms that had been closed in 2014. It is the negotiation that is underway.
Just a few weeks ago, at the end of February of this year, Guzmán paid some US$190 million of capital to the Paris Club, honoring what he had committed in 2021 (where he had disbursed another US$226 million). In March, the minister managed to avoid default and extend the bridging period. According to what Alberto Fernández pointed out yesterday, the government is advancing in the negotiation. Although the commitment of the parties was that the Agreement should be renegotiated before June 30, sources close to the president maintained that the Government could move that deadline forward, since it is only referential.
That date had been agreed upon in the March meeting between Guzmán and the Club’s president, Emmanuel Moulin. It was precisely with Moulin that Guzmán met again at the end of April this year, within the framework of his participation in the Spring Assembly of the International Monetary Fund (IMF) in Washington.
Source: Ambito
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