It “is not economically nor politically feasible” for Argentina to fully repay its more than $100 billion foreign debt, according to the International Monetary Fund.
Creditors will need to make a “meaningful contribution” to help end the country’s financial turmoil, the IMF added.
Private creditors will be expected to write off some portion of what’s owed them. Governments and international agencies will be under pressure to forgive the debts.
Argentina’s public debt now exceeds 90 percent of its GDP.
Argentina’s troubles began to sharpen in 2015, when then-president Mauricio Macri ended currency controls in response to inflation, allowing Argentinians to buy and sell foreign currencies without restriction. As a result, the peso lost 30 percent of its value.
Inflation didn’t abate and now exceeds 50 percent per year.
In 2018, bondholders lost confidence in the government’s ability to repay $100 billion in debt. The IMF and other agencies extended credit, but the troubles have only worsened.
Earlier this month, vice president Cristina de Kirchner said the country would “not pay even half a cent” toward its foreign debt until Argentina ended its financial crisis.
An IMF team is working with the government to find a solution.
