Paris Club angry with Argentina for paying China on time

United States, Europe and Japan They ask Argentina to provide an explanation on the treatment of debt it gives China. Specifically, if the Alberto Fernández government has requested or will request the same from Beijing terms to refinance the bilateral loans that he asked other countries, arguing that he does not have enough reserves to meet all the payments at the same time.

In the schedule, he says Argentina owes China US $ 445.6 million this year, a figure similar to what it owes Germany and Japan at the Paris Club.

The countries that make up this body demand equal treatment. They accept that the IMF or the World Bank have priority in recovery. But not that Argentina pays China in a timely manner when Beijing does not have the same gesture.

Official, diplomatic and market sources who closely follow the debt negotiations between Argentina and foreign bondholders, but also with the IMF and the Paris Club, confirm this information. the Claim was heard even in the to visit for Europe President Alberto Fernández and Minister of Economy Martín Guzmán.

Argentina negotiates with the Paris Club the payment of a debt of 2,400 million dollars. The deadline expires on May 30 and then runs for an additional 60 days. If the bond has not been canceled by July 31, it will be in default.

The Paris Club countries explained to the President that they were ready to give Argentina more time. As long as you sign a program with the IMF and an Article IV. It is a formality since the Ministries of the Economy of each country assess why a person is unable to pay a debt and if he cancels others at the same time. In making these judgments, they rely on Article IV of the IMF.

Another issue on the Paris Club table with Argentina, in addition to the Monetary Fund, is the issue of China. Diplomatic sources from Europe and other countries indicate that if the Paris Club agreed to Argentina extending debt cancellation with this body while paying China “It could set a precedent with uncertain results”.

“For the members of the Paris Club, it would not be fair if Argentina offered to extend the payment of its debts, while continuing to pay other creditors outside the club “Japanese Ambassador to Argentina Takahiro Nakamae said on the elDiarioAr website this week.

An Argentinian official, who asked that his name not be revealed, admitted that bilateral debts between countries have “The same rank of hierarchy”.

Global debate: the Chinese are pushing

There are governments that have asked Argentina to share the treatment it gives China when it comes to complying with its debt payments and whether it has requested or will request a restructuring of the maturities as requested. by the Paris Club. With the exception of Germany and Japan, all of the countries in this body expect lower payments than Argentina should make to China.

Argentina’s obligations to Beijing this year are US $ 445.5 million. They correspond to bilateral loans. At July expire three payments. But he has already canceled the due dates in January, March and April for over US $ 100 million. The total amount of debt owed to China is approximately $ 2,666.6 million.

The debate on conditions and terms of contracts and loans of China it has accelerated with the pandemic compared to its evolution in recent years: Beijing has set a certain priority in terms of debt collection compared to the rest of the countries. This is how a recent work assures the renowned economist, Anna gelpern (Georgetown University), which reviewed more than 100 contracts in 24 countries, including Argentina, Venezuela, Ecuador, as well as Africa and Asia. He found that all, since 2014, have confidential clauses it is therefore more difficult for debtors to change the terms of payment. The work even indicates that the China Development Bank threatened the previous Argentine government to cancel a railway project by proposing to halt the development of the dams by Holy Cross. Gelpern is one of the foremost scholars on sovereign debt issues and has followed Argentina’s case closely over the past decades. This week he exhibited and testified about his work at Capitol.

What will Argentina do

Diplomatic sources in Buenos Aires explained that the Chinese question “It is not final for what Argentina must resolve within the Paris Club, but we are talking about it”.

In the Argentine government, they admit that the problem is present, although they seek to alleviate it. They even argue that from a technical point of view, the comparison of debts between Paris Club countries and China “It doesn’t match, it’s comparing pears with apples”. Washington, Paris, Berlin and Tokyo they don’t think so. On Wednesday Fernández would speak with Angela Merkel by videoconference.

Argentina agreed with the Paris Club to pay the debt it carried from 2001, only in 2014. Axel Kicillof was Minister of the Economy. After this arrangement it was closed one contract with an export agency (Japanese Bank for International Cooperation). In 2017, to provide brakes to trains.

This week, Emmanuel Macron announced that the Paris Club countries had forgiven Sudan interest on debt. Sudan has a debt of around US $ 50,000 million, more than half of which with countries bilaterally. China has joined the gesture of the rest of the countries. Will Sudan be the mirror in which Argentina must turn to negotiate its debt?