Argentina: Debt, the IMF and Beyond

Informes Mensuales

 

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Argentina: Debt, the IMF and Beyond

Marzo 2004

The approval of the second tranche of the IMF agreement was preceded by tense negotiations and the threat of a breakup
in the relations.

Both parties are likely to continue to make efforts to maintain the program, but if there is not significant progress in the negotiations with private creditors by September the G-7 is likely to increase its pressure on Argentina and it is ready to accept an Argentine default with the multilaterals.

The external pressures generated some progress in the debt restructuring process, in particular the government’s appointment of the financial advisors. We expect that the offer will include a Par bond, a Discount bond and a peso bond (the last one for the domestic investors). The par bond would imply a smaller reduction in total debt, but it could allow the government to reduce the financial requirements during the first ten years by about 33%.