BUENOS AIRES, Argentina – Argentina and the Paris Club agreed early Thursday on a plan to resolve $9.7 billion in debts that have gone unpaid since the South American nation’s devastating economic crisis and default in 2001.
The Paris Club, a group of 19 lending nations that has lent more than $500 billion to countries in crisis since the 1950s, called the five-year payment plan a “sustainable and definitive solution” that should help Argentina normalize its relations with the international financial community.
Argentine Economy Minister Axel Kicillof highlighted that the cash deal requires no oversight from any international agencies that would put conditions on his government’s management of Argentina’s economy, and reduces interest on the debt from 7 per cent to 3 per cent.
The deal promises a $650 million cash transfer in July 2014 as a first step, and annual payments thereafter that Argentina will have no problem including in its debt calendar, Kiciloff said.
Also, it promises more support for Argentina’s economic recovery, because it provides for additional debt payments to Paris Club nations that agree to invest, the ministry said.
The club’s brief statement said only that “Paris Club members’ export credit agencies that wish to do so will resume their export credit activities.”
The Paris Club was formed initially to help Argentina in 1956, and the South American nation has remained indebted to it ever since, renegotiating payment plans in 1962, 1965, 1985, 1987, 1991 and 1992, the ministry noted.
“Finding a solution to this unpaid debt was always an objective of this government,” the ministry statement said, celebrating that the deal calls for cash payments rather than new debt. “With the deal reached today, Argentina closes one more chapter in its sad history of overindebtedness that has led it inevitably to default,” the ministry statement said.
The club’s permanent members are Austria, Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Netherlands, Norway, Russia, Spain, Sweden, Switzerland, the United Kingdom and the United States.