BUENOS AIRES (AFP) — Argentina's government announced Thursday it had struck a deal with three foreign banks to renegotiate annual payments on part of its 150-billion-dollar sovereign debt mountain.
The accord with Citibank, Deutsche Bank and Barclay's runs to 2012, the head of the cabinet, Sergio Massa, told reporters.
"The aim of the agreement is to improve Argentina's repayments profile," Massa said after a meeting between President Cristina Kirchner and representatives from the US and European banks.
He added that the bankers noted "the strength of Argentina in the current situation," referring to the global financial crisis.
Massa did not divulge the interest that would be applied to the renegotiated payments.
The deal will permit "a significant reduction of between 1.8 billion and 2.5 billion dollars regarding the financing needs (of Argentina) over the next three years," he said.
Argentina has to repay 40 billion dollars in debt over the next two years. Its total debt is 150 billion dollars, or 56 percent of its gross domestic product.
The country's economy collapsed in 2001, resulting in it defaulting on its 82 billion dollars in debt at the time.
Since then, the leftwing government of Kirchner and her predecessor and husband Nestor Kirchner have nurtured strong growth through stimulus policies and vigorous commodities exports. Inflation, though, has emerged as a serious problem in recent years.
Nearly a month ago, Cristina Kirchner said she was negotiating with the banks -- though she did not identify them at the time -- to pay off defaulted Argentine government bonds.
She said the goal was to pay back the holders of defaulted Argentine bonds who did not participate in a major 2005 restructuring of Argentina's debt organized by her husband.
Nestor Kirchner had convinced 76 percent of Argentina's creditors holding defaulted bonds to settle and be paid back at less than a third of the paper value of the debt.
But nearly 24 percent of the bond holders rejected that proposal and took their case to court to demand payment.
The deal announced Thursday would mainly affect this group.
The accord addressed a major outstanding problem for Argentina as it seeks to get its financial house in order.
On September 2, the country said it would pay off its 6.7-billion-dollar debt to the Paris Club of international creditors.
Last year, Argentina reimbursed a 9.5-billion-dollar debt to the International Monetary Fund.
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