New York (CNN Business)Argentina has struck a deal with its major creditors to restructure roughly $65 billion in sovereign debt, a hopeful sign for a country that now faces a brutal coronavirus-related recession on top of longstanding economic problems.
The agreement, announced by the government, breaks an impasse between Argentina and a group of private investors, including BlackRock and Fidelity Management. Argentina has struggled for decades with its national debt, now around $323 billion, which the International Monetary Fund describes as “unsustainable.” The government defaulted on its bond payments in late May, the ninth such default in the country’s history. “This agreement should help to bolster investor, business and possibly consumer confidence in Argentina in the near term,” Capital Economics’ Nikhil Sanghani wrote in a research note after the deal was announced.
Sanghani warned that Argentina was far from out of the woods and still faces significant challenges managing its debt level in the medium and long term. The new deal changes the dates and terms for some of Argentina’s debt repayments. In a statement, the government said it would “grant Argentina significant debt relief.” Investors have until August 24 to formally accept the new terms.Read MoreIn addition to its private creditors, Argentina owes $44 billion to the IMF. The Fund expects the Argentina economy to shrink nearly 10% this year, as the Covid-19 outbreak cripples the global economy. The recession will only further hinder the government’s ability to pay back its debt.
Source: edition.cnn.com
