Argentina’s government is trying to negotiate a restructuring of debt with creditors as the country’s finances dwindle and once more faces bankrupcy.
Argentina hasn’t made a bond interest payment since February. Now, Economy Minister Martin Guzman has given the country’s biggest bondholders until Friday to accept the offer he has put on the table to suspend payments until 2023 and reduce interest rates thereafter.
One of the largest of those creditors, the investment management firm BlackRock, rejected Guzman’s proposal and immediately presented a counteroffer.
On Tuesday, Argentina’s Economy Ministry released adjusted projections for fiscal year 2020: The ministry projected that the overall economy would shrink by 6.5% and that Argentina would have a primary fiscal deficit of 3.1%. Thus, just three days ahead of the looming deadline, the government presented investors with a vastly grimmer economic prognosis than it had in April.
As elsewhere, COVID-19 has left its mark on Argentina’s economy. Yet, the country’s pending bankruptcy has been on the horizon far longer than that. When Alberto Fernandez became president in December 2019, he inherited $320 billion in debt from his predecessors, Mauricio Macri and Cristina Fernandez.
Argentina’s government debt has risen as the country has continued to take on debt and its currency, the peso, has lost value. Today, $1 is worth 67.15 pesos — it was just over 15 pesos to the dollar in early 2017.
