Paris Club wants to repay Argentina $9bn

BUENOS AIRES: Members of the Paris Club group of creditors want Argentina to repay roughly $9 billion in defaulted debt within three years and to make a big initial payment, a local newspaper reported on Saturday.

Argentine officials have been negotiating a repayment plan with the Paris Club over the outstanding debt, one of the last remnants of Argentina's $100 billion debt default in 2002.

They have said repeatedly that they are optimistic about reaching a repayment deal, which is seen as a key step in Argentine efforts to clear up lingering fallout from the 2001-02 economic crisis and pave the way for a return to credit markets.

But La Nacion newspaper quoted un-named Paris Club and diplomatic sources as saying there had "not yet been progress" toward an agreement on the payment conditions. The sources said the Paris Club wanted the debt repaid within three years.

The newspaper also said a large initial payment would be needed for creditors to reopen credit lines for the purchase of capital goods and medium-term investments in Latin America's fast-growing No. 3 economy.

Early this year, another local newspaper said that in exchange for agreeing to a higher payment, Argentina would try to extend the repayment period to five or six years from the 18 months the creditors initially requested.

In a routine filing to the US Securities and Exchange Commission (SEC) late last month, Argentine put the total Paris Club debt at $8.9 billion.

Argentina's government plans to use central bank reserves to service its debts for a third consecutive year in 2012, but economic analysts say reserves alone will not be enough to cover an estimated financing gap of up to $9 billion.

The gap would widen still further if the government seals a deal to repay the Paris Club debt.

President Cristina Fernandez, who is expected to be re-elected this month, said late last year that Argentina had persuaded the Paris Club to negotiate a deal without the usual oversight from the International Monetary Fund.

Copyright Reuters, 2011