It has been agreed with them that the full amount of $ 65 billion in debt will not be repaid. “Of every dollar, 55 dollar cents will be repaid,” said Bert Colijn, senior economist at ING Bank.
“That saves a sip on a drink, because the total debt is above 300 billion dollars,” said Colijn.
Bankrupt eight times before
This may help Argentina to avoid bankruptcy and give the economy some air again. The country is struggling economically, it has been in recession for two years. The economy may shrink 12 percent this year.
Argentina has a long history of financial problems. It went bankrupt eight times before.
The problem now is that debt is in foreign currencies, including dollars, while the value of the dollar rose at the beginning of the corona crisis. Converted into the home currency, the Argentine peso, the debts therefore increased.
Due to the corona crisis, investors prefer dollars in times of uncertainty, which means they can withdraw their money from emerging countries and exchange them for dollars, Colijn explains.
Not the only one in trouble
Argentina is not the only country in trouble, says Colijn. In total, a hundred countries have already turned to the IMF (International Monetary Fund) for support, says Colijn.
“In the Netherlands, we are already struggling with the corona crisis, but that is even more severe in emerging countries,” he says.