PARIS CLUBS LAYS TERMS FOR ARGENTINA TO PAY DEFAULTED DEBT http://namnewsnetwork.org/v2/read.php?id=172814

Members of the Paris Club group of creditors want Argentina to repay an estimated US$9 billion in defaulted debt within three years and to make a big initial payment, local newspaper La Nacion reported. Argentine officials have been negotiating a repayment plan with the Paris Club over the outstanding debt, one of the last remnants of Argentina's US$100 billion debt default in 2002. They have said repeatedly that they are optimistic about reaching a repayment deal, which is seen as a key step in Argentine efforts to clear up lingering fallout from the 2001/02 economic crisis and pave the way for a return to credit markets.

However the report from La Nacion quoting diplomatic sources says that there had “not yet been progress” toward an agreement on the payment conditions. The sources said the Paris Club wanted the debt repaid within three years. The newspaper also said a large initial payment would be needed for creditors to reopen credit lines for the purchase of capital goods and medium-term investments in Argentina. Early this year, Buenos Aires media said that in exchange for agreeing to a higher payment, Argentina would try to extend the repayment period to five or six years from the 18 months the creditors initially requested.

In a routine filing to the US Securities and Exchange Commission (SEC) late last month, Argentine put the total Paris Club debt at US$8.9 billion. Argentina's government plans to use central bank reserves to service its debts for a third consecutive year next year but economic analysts say reserves alone will not be enough to cover an estimated financing gap of up to US$9 billion. The gap would widen still further if the government seals a deal to repay the Paris Club debt. President Cristina Fernandez said late last year that Argentina had persuaded the Paris Club to negotiate a deal without the usual oversight from the International Monetary Fund (IMF).

However since then Argentina faces a further hurdle which is Washington’s annoyance with the fact that the Cristina administration has not paid compensation to U.S companies taken over in Argentina, in spite of favourable rulings from the World Bank tribunal on investment disputes.In effect the U.S voted, in the World Bank and in the Inter American Development (IADB) bank, against granting loans to Argentina and anticipated this will be official policy until Buenos Aires complies with the rulings, sources said. The United States is also a member of Paris Club creditor nations and in the past has had a supportive attitude towards Argentina. This apparently will no longer be the case, sources said.

[Paris Club (Club de Paris) "is an informal group of official creditors whose role is to find co-ordinated and sustainable solutions to the payment difficulties experienced by debtor nations. Paris Club creditors agree to rescheduling debts due to them. Rescheduling is a means of providing a country with debt relief through a postponement and, in the case of concessional rescheduling, a reduction in debt service obligations. ... the Paris Club has remained strictly informal. It is the voluntary gathering of creditor countries willing to treat in a co-ordinated way the debt due to them by the developing countries. It can be described as a 'non institution'. ... Although the Paris Club has no legal basis nor status, agreements are reached following a number of rules and principles agreed by creditor countries, which help a co-ordinated agreement to be reached efficiently."[http://www.sourcewatch.org/index.php?title=Paris_Club

[ALSO SEE...The 19 creditor nations that make up the Paris Club http://www.voltairenet.org/Como-os-credores-decidem-o-destino