Argentina debates debt restructuring bill
Reawakens old fears of financial crises
BUENOS AIRES, Argentina, Feb 1, (AP): Argentina’s Chamber of Deputies on Wednesday began discussing a bill to restructure the country’s external public debt which officials say is unpayable amid a deep recession and has reawakened old fears of financial crises.
With the support of the main opposition parties, the government of President Alberto Fernández appears to have passage of the bill assured. Some leftist groups opposed to it plan demonstrations outside of congress. A vote could take place later Wednesday and the bill would then be sent to Senate for passage next week.
The center-left government’s handling of the bill, in an extraordinary session, highlights the importance it attaches to the South American country’s large debt. It owes the International Monetary Fund and private creditors some $100 billion.
Economy Minister Martín Guzmán has warned that Argentina needs “a sustainable solution” to paying its debt.
“Today the situation is critical, the debt burden cannot be sustained,” he said.
Argentina periodically faces financial crises and liquidity problems that have led it to refinance its debt. At the end of 2001, it declared a record default on just over $100 billion during the worst economic crisis in its history. It is currently dealing with a contracting economy, high inflation and a weakened currency.
The bill declares the sustainability of external public debt a “priority” and authorizes the government to carry out a “restructuring of interest maturity services and capital amortization of public securities issued under foreign law.” It establishes that the executive will determine the nominal amounts.
The legislative debate takes place as the economy minister begins talks with the IMF to renegotiate the payment of some $44 billion transferred to Argentina under a 2018 credit agreement worth more than $56 billion. The talks will continue in February.
Carlos Heller, head of the Chamber of Deputies’ Committee on Budget and Finance, said before the start of the debate that there is a consensus on the need to renegotiate the debt and recalled that the 2015-2019 government of President Mauricio Macri acknowledged it was unpayable.
Macri’s opposition party, Together for Change, agreed to support the bill in exchange for creating a working table to analyze the sustainability of the debts Argentina’s provinces have with the federal government.
Leftist lawmaker Nicolás de Caño criticized the pact between the Fernández’s government and the opposition to “pay the fraudulent debt that Macri left us.”