Argentina is unsure it can pay its debt offer
Local scepticism over proposed debt offer rises as bid to include GDP warrants rejected.
The government of Argentina says it cannot increase the value of its repayment offer to the country’s creditors because “we are not 100% confident that we can afford [what we have already offered].”
An unnamed government official tells Euromoney that the deteriorating economic and fiscal situation in Argentina – which has already suffered two years of recession before this year, when Covid-19 is expected to see a further 10% contraction of GDP – has complicated its ability to model the sustainability of its current offer, which is worth roughly 53 cents on the dollar.
“Argentina has implemented a fiscal programme [in response to the pandemic] worth about 3% of GDP, and we have seen a fall in revenues worth about 2% of GDP,” he says. “However, we didn’t change our proposal [to creditors] because we thought we had buffers to have a recovery. On the other hand, given where we are now, it’s maximum offer we can make.”
The official’s comments play to the growing views of many within the Buenos Aires finance community.
|Juan Manuel Pazos,
“The government and bondholders are both assuming that the Argentine economy is going to rebound in the coming years – that a $300 billion economy is going to become a $400 billion economy in the next five or six years,” says Juan Manuel Pazos, chief economist at TPCG Valores in Buenos Aires.