Economy

Graphic: Debt deal cleans up short-term horizon

6th August 2020

By The Essential Staff

Graphic: Debt deal cleans up short-term horizon

If one thing is clear after the debt deal sealed between Argentina and its main foreign bondholders is that it frees up the country’s re-payment schedule in the near term, as President Alberto Fernández made sure to point out in interviews throughout the week.

</p> <p><a href="https://www.youtube.com/watch?v=CnLT2hzvcjM&amp;t=784s">Speaking</a> on the day that the deal was announced, and in a clip that was republished in multiple government social media accounts, Fernández was eager to show a piece of paper with a graph produced by his Economy Ministry, which highlighted the difference in upcoming payments before and after the agreement.</p> <blockquote class="twitter-tweet" data-width="550" data-dnt="true"> <p lang="es" dir="ltr">📺 “Cuando decimos ‘ordenamos la deuda’ significa que todo el dinero que no vamos a pagar en intereses, vamos a destinarlo a la producción, al desarrollo, a la generación de empleo, a la obra pública y a la infraestructura”. El presidente <a href="https://twitter.com/alferdez?ref_src=twsrc%5Etfw">@alferdez</a> con <a href="https://twitter.com/Gatosylvestre?ref_src=twsrc%5Etfw">@Gatosylvestre</a> en <a href="https://twitter.com/C5N?ref_src=twsrc%5Etfw">@C5N</a>. <a href="https://t.co/mutSvTkjFj">pic.twitter.com/mutSvTkjFj</a></p> <p>&mdash; Alberto Fernández Prensa (@alferdezprensa) <a href="https://twitter.com/alferdezprensa/status/1290807267680563202?ref_src=twsrc%5Etfw">August 5, 2020</a></p></blockquote> <p><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></p> <p>&#8220;I want people to look at this. All this money we will not be paying is money that can go towards investment and development. Instead of interest payments we will have money for production, for job creation, for infrastructure,&#8221; Fernández told C5N while showing the paper to the cameras. A translated version of that same graph can be seen below.</p> <img class="wp-image-10590 aligncenter" src="https://gettheessential.com/wp-content/uploads/2020/08/05-ago-1.jpg" alt="Argentina's debt maturity schedule before and after the deal, as shown by Alberto Fernández in an interview this week" width="849" height="554" srcset="https://gettheessential.com/wp-content/uploads/2020/08/05-ago-1.jpg 1200w, https://gettheessential.com/wp-content/uploads/2020/08/05-ago-1-300x196.jpg 300w, https://gettheessential.com/wp-content/uploads/2020/08/05-ago-1-1024x667.jpg 1024w, https://gettheessential.com/wp-content/uploads/2020/08/05-ago-1-768x500.jpg 768w, https://gettheessential.com/wp-content/uploads/2020/08/05-ago-1-600x391.jpg 600w" sizes="(max-width: 849px) 100vw, 849px" /> <p>The gains on the first few years of the deal are very noticeable for Argentina, from roughly 10 billion USD paid per year to foreign-law bondholders between 2020 and 2023 to 0 in 2020, 0.1 in 2021, 1 in 2022 and 1.4 billion in 2023.</p> <p>But Fernández drew some criticism for the way in which he presented the graph, by folding the piece of paper right between 2024 and 2025, the first year in which post-agreement maturities start to exceed those present before the deal, a part of the graph which was not shown to the cameras.</p> <p>Indeed, the payment schedule becomes tougher from that point onward, with 7 to 10 billion in maturities per year until 2035, and Argentina will need to find a way to re-finance those debts at cheap rates that it has been unable to obtain lately, pay with cash, or fall into debt trouble again. For a country that has not shown any economic growth for the last decade, that will not be the easiest of asks.</p> <p>

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The Essential Staff

The Essential is a premium subscription-based news platform that brings you high quality journalism and in-depth coverage in English about the changing face of Argentina’s politics and economy.