Argentina’s president Alberto Fernandez has said that the government will make an offer to its creditors that will reflect the economic hit from the coronavirus pandemic.
The South American country, which has been facing financial problems had recently bought itself some time, after the coronavirus outbreak stalled talks with international creditors, by halting payments on debt denominated in dollars but covered by local law until 2021.
The move would delay a large part of $7 billion in foreign currency payments due in May and would give the country more time to put a strategy in place to repay a debt burden that the government has repeatedly said it cannot pay.
While debt talks are “going well,” calculations of debt sustainability will be affected by the impact of the virus, Fernandez said in an interview.
“The coronavirus affects debt renegotiation just as the coronavirus affects the entire global economy,” Fernandez said.
“What we are going to sign is something that we can accomplish as a government and as a country. I don’t want to commit to signing something unfulfilled.”
Fernandez said that Argentina needs an economic recovery plan similar to the post-World War II Marshall Plan and that a massive recovery effort is more urgent than an inflation containment plan.
Argentina is in talks to renegotiate $68.8 billion in international debt with private creditors and has said it aims to avoid a costly default, even after it extended quarantine measures until April 26 to halt the spread of coronavirus. The country’s GDP is now expected to contract 5.4% in 2020 from 1% previously, according to a forecast by investment bank Goldman Sachs.
“At this moment I’m not worried about the budget or fiscal deficit.The priority is protecting lives and health,” said Fernandez.
“What there is not going to be is any type of debt restructuring in pesos. “We will meet the debt in pesos.”
S&P Global downgraded Argentina to “selective default” last week after the country said it would freeze payments on its dollar-denominated debt under local law until year-end.
“We believe the likelihood of another foreign-currency default is virtually certain, given the timing and advanced nature of the comprehensive foreign-law restructuring process,” it said.
Fernandez said the nation’s quarantine measures have been successful in slowing the pace of coronavirus, adding that he couldn’t say when the measures would end.
The country has 2,142 confirmed cases of Covid-19 and 90 deaths, according to the health ministry.