A Third Way for Argentina: Reprofiling

Despite allegations to the contrary, “reprofiling” is not an Argentine euphemism for debt restructuring. It is a distinct liability management exercise that is optimal, from a welfare standpoint, for certain well-defined sovereign debt crises. In our (preliminary) opinion, Argentina’s situation meets the required criteria for a reprofiling that would defer its maturities for a relatively short period, while not reducing either the face value of its obligations to private creditors or their contractual coupons, the Financial Times reported in a commentary. In fact, the IMF incorporated reprofiling to its access policy in 2014, in response to criticism it suffered after its alleged procrastination in requiring private sector involvement (PSI) during Greece’s debt crisis. Read more

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