In the fight against the state bankruptcy: Argentina makes new offers to creditors

Argentina has been negotiating debt restructuring with various groups of creditors for months. Now the country wants to offer them a new offer. The creditors had until the end of August to respond.

Argentina has announced a new offer to its creditors in the fight against a state bankruptcy and wants to extend the previous settlement period by five weeks until the end of August. The new proposal is a major effort for his country, President Alfredo Fernández told Radio Millenium. The country is pushing its limits. Details would be presented in a timely manner and creditors would have until the end of August to respond.

The once richest country in South America is in recession and is also struggling with the consequences of the virus crisis. It says it can no longer service its debts and is therefore trying to get foreign creditors holding bonds worth around $ 65 billion to waive their claims. If there was no agreement, this would be considered a default and Argentina would technically be considered bankrupt. This would make it difficult for the country to take out new debt at acceptable interest rates. For investors, on the other hand, there is a risk of failing to end up with nothing in the end.

The government and various creditor groups have been negotiating debt restructuring for months. The government's last offer was that donors are satisfied with about 50 percent of their actual claims. The creditors side had asked for around 55 percent. Finance minister Martín Guzmán said in May that Argentina could not continue to spend 20 percent of its government revenue on interest payments, especially in times of viruses.

The country expects an economic slump of around twelve percent this year due to the corona consequences. The International Monetary Fund has described the country's debt burden as unsustainable. Argentina has a total debt of $ 323 billion. The country had already gone bankrupt in 2001 after it had stopped servicing its debts. From 2015 it was able to finance itself again on the free capital market.