Argentina rejects creditors' 'impossible' counteroffer

Argentina rejects creditors' 'impossible' counteroffer

A group comprising three of Argentina's biggest creditors has described a government proposal to restructure debt as "short of what the creditor groups can accept." The government said it has little room to maneuver.

Three of Argentina's largest creditors announced on Monday that they had rejected a government proposal to restructure debt worth more than $66 billion (€58 billion).

The Argentine government had offered 53.5 cents to the dollar under a restructuring plan. That figure was significantly higher than an initial proposal that offered 39 cents to the dollar.

"Argentina's offer is short of what the creditor groups can accept," said a statement issued by Exchange Bondholders, Ad Hoc and Argentina Creditor Committee. The three groups claim to represent more than a third of international bondholders.

Instead, the groups said they have issued a counteroffer to President Alberto Fernandez's government. The International Monetary Fund (IMF) has supported the conservative government's efforts to restructure part of its debt to make it more sustainable in the longterm.

'Impossible' counteroffer

Hours after the announcement of the counteroffer, the Argentine government hit back, saying some of its creditors were showing a "lack of understanding" with regards to the country's current economic situation.

The president's office said it would be "impossible" to modify its latest offer, adding that the government strongly believes other creditors are open to moving forward on that proposal.

Argentina's debt is worth $324 billion, amounting to roughly 90% of its GDP. Under its latest proposal, Argentina would restructure around a fifth of its debt.

Coming on the heels of Argentina's 2018 recession, the novel coronavirus pandemic has further plunged the economy into turmoil. The IMF has forecasted a contraction of 9.9% this year.

Under the latest proposal, the Argentine government would begin servicing its debt in September 2021 under a one-year grace period.

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