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Argentina strikes $2 billion Paris Club debt deal By Reuters

© Reuters. FILE PHOTO: Argentina’s new Economy Minister Sergio Massa attends a news conference after being sworn in, at the Economy Ministry in Buenos Aires, Argentina, August 3, 2022. REUTERS/Matias Baglietto/File Photo

By Nicolás Misculin and Jorgelina do Rosario

BUENOS AIRES/LONDON (Reuters) -Argentina reached a deal to restructure some $1.97 billion it owes the Paris Club, Argentina’s government and the creditor group said on Friday, which would push repayments back as far as 2028 and bring relief of some $248 million to country.

“Today, Argentina successfully completed an agreement with the Paris Club to normalize relations between our country, our companies, and our workers with the countries of the European bloc,” Argentine Economy Minister Sergio Massa said.

The deal would see the current 9% interest rate on the debt cut to a weighted average of 4.5%, according to a document shared with Reuters by officials. Payments would start from December with interest gradually stepping up from 3.9%.

Argentina would pay around 40% over the next two years, the government said in the document, a payment profile it said was “sustainable and did not compromise the process of strengthening international reserves.”

Argentina, which has restructured over $100 billion in debts with private creditors and the International Monetary Fund in the last two years, remains in a precarious position with scarce foreign currency reserves it is trying to rebuild.

The country’s sovereign bonds remain distressed, as low as 20 cents on the dollar. Ratings agency Fitch downgraded the country this week, citing rising risks over its ability to repay future debts.

The Paris Club, whose members include the United States, Japan and Germany, last year gave Argentina more time to repay the debt while it carried out an ultimately successful negotiation with the IMF over a new $44 billion program.

The Paris Club said in a statement the two sides had revamped the debt deal to clear remaining payments over a six-year period between December 2022 and September 2028.

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