PARIS: Argentina, fighting to stabilise its economy, obtained a deal yesterday to clear nearly $10bn in debt arrears from official creditors in The Paris Club.
The representatives of Paris Club creditors and Argentina “agreed on an arrangement to clear debt in arrears due to Paris Club creditors over a five-year period”, the club said.
Analysts commented that the deal was a positive step towards orthodox economic policy, but that the economy was in a precarious state. Under the terms of the deal, which covered total arrears of $9.7bn, Argentina would repay a minimum of $1.15bn by May 2015, with the next payment due by May 2016, the club said.
“Realisation of initial payment under a formal commitment of Argentina to fully clear its arrears is a necessary and important step for the normalisation of financial relationships between Paris Club creditors and Argentina,” it said.
Argentina was represented in the negotiations by Finance Minister Axel Kicillof, a key member of the centre-left government. The government of President Cristina Kirchner, who has headed the country since 2007, had announced in 2008 that it wanted to pay back the debt inherited from the 2001 crisis when the country defaulted on its payments.
“The Argentine government’s deal to settle its debts with the Paris Club will not in itself change much on the ground,” commented David Rees, emerging markets economist at Capital Economics in London. “But it marks another positive development in policymaking since the turn of the year as the authorities battle to stave off a balance of payments crisis.”
He said: “Financiers from the Paris Club nations will now be able to offer trade finance to Argentine exporters, but this does not appear to have been a major constraint on trade.” AFP
