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Argentina finally reaches agreement over default debts

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Argentina finally reaches agreement over default debts
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Argentina has reached an agreement with creditor nations on repaying its overdue debts that date back to a default in 2001/2002.

The Paris Club of creditors said the agreement will allow Argentina to clear over five years of arrears that recently stood at the equivalent of just over seven billion euros, and on terms that analysts said looked favourable for Buenos Aires.

The landmark deal should open up much-needed international financing for Argentina and the economy minister said it will make it easier for companies to get trade financing.

Foreign investment could prompt a revival in Latin America’s third largest economy.

The country’s refusal up till now to agree to its creditors’ terms has created a mountain of litigation and helped fuel inflation that has eroded living standards for Argentinians.

The resistance to settling with its creditors may have made it a pariah of international capital markets but also a hero in the eyes of many Latin American leftists.

Germany is Argentina’s biggest Paris Club creditor with about 30 percent of the debt, followed by Japan with about 25 percent. Smaller holders include the Netherlands, Spain, Italy, the United States and Switzerland.

Though a major agricultural producer and endowed with shale oil and gas reserves, Argentina’s development has fallen behind many other emerging economies, stunted by a history of economic mismanagement.

with Reuters