Argentina plans payment freeze on up to $10 billion in local-law dollar debt

Argentina plans payment freeze on up to $10 billion in local-law dollar debt

Argentina plans to postpone payments on up to $10 billion of dollar debt that was issued under local law until the end of the year, the government said in a decree late on Sunday, in a bid to relieve pressure over looming foreign currency payments.

The decree of necessity and urgency (DNU), sent to Reuters, would not affect the just under $70 billion in foreign currency debt issued under international law that Argentina is currently in talks to restructure with creditors.

Argentina’s government has previously said it is looking to restructure $83 billion in foreign currency debt under both international and local law as it looks to avert a sovereign default that would hit its access to global markets.

The move to delay payments on the local-law debt could give Argentina breathing room and may enable it more easily to make payments on foreign-law bonds. As the debt was issued under local law, any creditors wanting to take legal action would need to do so in local courts.

The country’s economy ministry did not immediately respond to a request for further comment on Sunday.

President Alberto Fernandez and Economy Minister Martin Guzman have repeatedly said Argentina cannot pay its public debts until it is given time to revive an economy that has been mired in recession for the last two years.

Major creditor the International Monetary Fund has supported the country’s stance, saying its debts are unsustainable.

Guzman is expected to soon make a proposal to private creditors to restructure the country’s foreign law bonds, a process that has been hit by delays amid the global coronavirus pandemic that has led to a nationwide lockdown in Argentina.

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