Argentina’s Minister of Economy, Martín Guzmán, said on Tuesday that Argentina had reached an agreement to postpone most of the US$2.4 billion payment to a group of wealthy countries until the end of July to avoid another damaging default.

Argentina must now agree with The so-called Paris Club 22 countries including the United States, Germany, Japan and France.

Guzman stated that Argentina will pay US$430 million in two installments before then. The first installment will be paid before July 31. At that time, a 60-day grace period for the US$2.4 billion payment due on May 30 will be paid. the end. Guzman said the agreement will effectively save the country US$2 billion in the next eight months.

The agreement will provide some breathing room for Argentina’s troubled economy, which has been drastically depleted despite rising commodity prices in recent months boosting foreign exchange reserves.

“Solving our unsustainable debt problem is the basic pillar of the process of restoring economic stability,” Guzman said at a press conference in Buenos Aires. He said that this will also help ease the situation where the annual inflation rate is close to 49%.

The agreement with the Paris Club is negotiation Since the currency crisis occurred during Mauricio Macri’s previous administration in 2018, the repayment of the $45 billion that the IMF has lent to Argentina has stalled.

Local analysts said that due to political considerations, negotiations with the International Monetary Fund have reached a deadlock. With the November mid-term elections approaching, the government does not want to be dragged down by the strict budget cuts reached with multilateral lending institutions.

Although Argentina was initially expected to reach an agreement with the International Monetary Fund as early as last year — shortly after the successful restructuring of approximately US$65 billion owed to private creditors — it lacked an agreement that included a commitment to reduce the country’s ballooning fiscal deficit. Complicate the situation. Talks with the Paris club.

Guzman said: “Paying this amount will hit the international reserves and bring more instability to the exchange rate and the macro economy,” he added, adding that a default will destabilize the economy and create greater uncertainty.

Guzman clarified that the government will continue “constructive” negotiations with the International Monetary Fund, and the March deadline with the Paris Club “has nothing to do with the goals of the agreement with the International Monetary Fund. Our goal is to reach a good deal.” , The sooner the better, but the priority is that it is good.”

The 38-year-old minister added that another key element of the agreement with the Paris Club is that Argentina will treat its creditors equally in order to alleviate Japan’s concerns about Argentina’s debt repayment to China rather than the Paris Club.