Argentina technically suffers record ninth default

Ratings agency Fitch downgrades the nation's foreign currency ratings


Argentina has technically suffered its ninth debt default in its history as the ongoing pandemic exacerbates an already troubled situation.

President Alberto Fernandez announced that the nation has unilaterally postponed the payment on $10bn (£8bn, €9.1bn) of dollar-denominated debt governed by Argentine law. By freeing the country from international default arbitration until the end of 2020 this move has provided the government with welcome breathing space and time to prepare for its eventual foreign currency payments.

The peronist-lite government of Mr Fernandez returned to power last year after centre-right leader Mauricio Macri failed to stabilise the Argentine economy and lost popular support.

Since assuming the role, the president, along with the economy minister Martin Guzman, has consistently argued that Argentina cannot pay its sizable public debt until the country emerges from its now two-year long recession.

Argentina only has 1,628 confirmed cases of the novel coronavirus, with 54 deaths. As in many other countries, however, the nationwide lockdown imposed to arrest Covid-19’s spread has inflicted significant economic pain. In 2020 thus far, the MERVAL index has fallen 35.39 per cent.

With the world wracked with this natural disaster, President Fernandez will hope that Argentina’s creditors, including the International Monetary Fund, will be more understanding when it comes to restructuring the $83bn of foreign debt he has been trying to restructure since taking office.

The ratings agency Fitch’s decision to downgrade Argentina’s foreign currency ratings to RD (restricted default) at the start of the week will do little to bolster such hopes.

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