If they fail, they’ll compound the country’s suffering.
It’s the sovereign-debt version of “Groundhog Day”: For the ninth time in its history and the second time in six years, Argentina has stopped servicing its debts. On May 22, the government failed to make interest payments on $65 billion owed to foreign bondholders. The country and its creditors are discussing a deal to restructure the loans, with a deadline set for today. It’s in both sides’ interests to compromise and make these talks succeed.
The people of Argentina have the biggest stake of all. Even before the Covid-19 crisis bore down on Latin America, the country’s unemployment rate had surged. Inflation is at its highest in nearly three decades. An outcome that leaves the country with unsustainable debts or (in the case of a disorderly default) closes its access to international finance would crush living standards that are already under assault.
Given Argentina’s history of delinquency, it’s understandable that bondholders are reluctant to restructure its debt once more.
