Argentina reports debt restructuring deal with creditors

FILE - In this July 20, 2020 file photo, people exercise during a government-ordered lockdown to curb the spread of the new coronavirus in Buenos Aires, Argentina, after the city government authorized people to exercise outdoors as part of a roadmap for rolling back on Covid-19 curbing quarantine restrictions. Argentinas government said Tuesday, Aug. 4, 2020, it has reached an agreement with its main creditors to restructure billions of dollars in foreign debt, offering some relief for a country hobbled by recession even before the pandemic hit. (AP Photo/Natacha Pisarenko, File)
FILE - In this July 20, 2020 file photo, people exercise during a government-ordered lockdown to curb the spread of the new coronavirus in Buenos Aires, Argentina, after the city government authorized people to exercise outdoors as part of a roadmap for rolling back on Covid-19 curbing quarantine restrictions. Argentinas government said Tuesday, Aug. 4, 2020, it has reached an agreement with its main creditors to restructure billions of dollars in foreign debt, offering some relief for a country hobbled by recession even before the pandemic hit. (AP Photo/Natacha Pisarenko, File) (Copyright 2020 The Associated Press. All rights reserved)

BUENOS AIRES – Argentina said Tuesday it has reached an agreement with its main creditors to restructure $65 billion in foreign debt, offering some relief for a country hobbled by recession long before the pandemic.

The agreement will allow creditor groups “to support Argentina’s debt restructuring proposal and grant Argentina significant debt relief,” the Economy Ministry said in a statement. It said some payment dates will change without raising the total amount of capital and interest to be paid “while enhancing the value of the proposal for the creditor community,” according to the statement.

The reported deal followed seven months of talks and shifting deadlines, and coincided with another extended period of economic misery in Argentina, where unemployment and inflation are stubbornly high, and the peso has been declining for years. The pandemic made things worse, as Argentina imposed a lockdown that helped to curb the spread of the new coronavirus but paralyzed vast sectors of the economy.

“We resolved an impossible debt during the worst economic crisis in memory and in the middle of a pandemic," President Alberto Fernández said.

Argentina has also been involved in talks with the International Monetary Fund about restructuring $44 billion in debt owed to the lender. The deal that Argentina announced on Tuesday was seen by analysts as a welcome step forward that could open the way for progress with the IMF, even if Argentina’s economic fortunes look fragile for the long term.

Kristalina Georgieva, managing director of the IMF, congratulated Argentine officials for reaching an agreement “in principle" on the nation's debt.

“A very significant step. Look forward to a successful conclusion in the interest of all," she said on Twitter.

“Today’s sovereign debt restructuring deal agreed between Argentina’s government and private creditors allays fears of another debilitating legal scrap, akin to what followed the country’s 2001 default,” Capital Economics said in an analysis.