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Argentina's Milei needs to deactivate $400 bln 'debt bomb' - Reuters
Source: Reuters
By Jorgelina Do Rosario and Rodrigo Campos
December 13, 2023
A man walks past the facade of Argentina's Central Bank, one day after the inauguration of Argentina's President Javier Milei and his Vice President Victoria Villarruel, in Buenos Aires, Argentina, December 11, 2023. REUTERS/Agustin Marcarian
BUENOS AIRES/NEW YORK, Dec 13 (Reuters) - Argentina's economy has many problems, and dealing with a mountain of debt repayments over the next two years could determine whether the new government's economic road map succeeds.
The country's total sovereign debt exceeds $400 billion, some $110 billion of which is owed to the International Monetary Fund and to holders of restructured, privately-held eurobonds.
With central bank reserves in the red by more than $10 billion and little chance of tapping the market, the country has some $16 billion in debt payments coming due next year.
Javier Milei, inaugurated on Sunday with a mandate to straighten out the economy, spoke of a "$100 billion debt bomb" while economy minister Luis Caputo widened it to the $400 billion in total sovereign debt.
"Argentina is facing a formidable challenge in terms of FX debt maturities," said Juan Ignacio Paolicchi, chief economist at Buenos Aires-based consultancy firm Empiria.
"The need for a debt rollover is imminent."
The government on Wednesday weakened Argentina's peso by nearly 55% to 800 per dollar, and earlier said energy subsidies will be cut and tenders of public works canceled.
The grains exporter struggled in 2023 to pay back the IMF, resorting to deals with China and with Qatar to make ends meet.
Yet the fund said shortly after Caputo's economic measures' announcement that they provide "a good foundation for further discussions to bring the existing Fund-supported program back on track."
