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Argentina extends debt restructure deadline again

Buenos Aires-Argentina has extended its deadline to restructure a $66 billion debt for the third time until June 12 in a bid to improve its offer to creditors, the economy ministry said on Monday.

The previous deadline was due to expire on Tuesday, but now Argentina will seek to “introduce additional adjustments with the aim of maximizing investor support, while preserving at the same time its (Argentina’s) aim of a sustainable debt,” an official statement said.

“Argentina and its advisors intend to take advantage of this extension to continue the discussions and allow the investors to continue to contribute to a successful restructuring of the debt.”

The news comes just 10 days after Argentina defaulted after failing to pay $500 million of interest on its bond debt.

Though Argentina is one of the world leaders in food exports, it was the country’s ninth default and first since 2001, when it owed $100 billion, triggering a painful social and economic crisis.

Earlier on Monday, the International Monetary Fund gave its backing to a revised proposal by the Argentine government.

Argentina has been involved in months of tough negotiations with creditors, but the IMF warned that the government has little scope for a better offer.

Argentina’s revised offer presented to creditors last week “would be consistent with restoring debt sustainability with high probability,” the IMF said in a statement.

However, it said that “analysis suggests that there is only limited scope to increase payments to private creditors while still meeting the debt and debt service targets.”

Argentina said a successful negotiation would “stabilize the economy, alleviating the medium and long-term restrictions” on the economy, thus “allowing the country’s economic trajectory to be redirected towards long-term growth.”

In April, Argentina asked bondholders for a three-year grace period on debt repayment, a 62 percent reduction on interest amounting to $37.9 billion, and 5.4 percent on capital — or $3.6 billion.

That was rejected by most creditors, but the revised proposal implied slightly more favorable terms, offering creditors in the region of 45 cents on the dollar.

“I think there is still some way to go, that the negotiation is not closed with this proposal,” Matias Rajnerman, chief economist of Buenos Aires consultancy Ecolatina, told AFP.

He said creditors were likely to accept a deal in the region of 50 cents on the dollar.

“It seems to me that this is not the final proposal, that the negotiations can still be extended for a couple of weeks,” he added.

The crisis-wracked South American country, which has been in recession for two years, currently owes $324 billion, the equivalent of around 90 percent of its GDP.

Around 35 percent of its 44 million people live in poverty.

The novel coronavirus pandemic provoked an 11.5 percent plunge in the economy in March compared to the same period last year.

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