South America

Argentina’s Peronist government has had a wild ride in its first year of government: a sovereign default, mammoth debt restructurings, sliding reserves, a currency crisis and a weak economy battered by COVID-19, Reuters reported. There have been wins and losses since taking office in December last year. Debt deals were struck that allowed the government to revamp some $110 billion in foreign currency bonds and push repayments well into the future. Crunch talks with the International Monetary Fund remain positive.

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Holders of Argentina’s $15bn in provincial debt are growing nervous that pressure from the national government is behind “arbitrary” demands for debt restructurings, threatening investors with big losses, the Financial Times reported. After the successful restructuring of $65bn in sovereign debt with foreign creditors in August, Argentina’s leftist government is now locked in talks with the IMF to renegotiate the repayment of $44bn lent since a currency crisis in 2018. Foreign creditors to Argentina’s provinces are next in line.

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Argentina’s Buenos Aires province has extended an already-delayed deadline to Jan. 4 for bondholders to agree a deal to restructure some $7 billion in foreign debt, the local government said in a statement late on Monday, Reuters reported. The extension comes as the latest deadline came and went on Friday without an agreement with its creditors. “The Ministry of Finance will continue to dialogue in good faith with external private creditors,” the district said in the statement announcing the extension on its website.

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Relations between the United States and China promise to be fraught even under President-elect Joe Biden’s administration, Bloomberg News reported in a commentary. There’s one area where the two rivals can and should cooperate immediately, however: to head off a looming debt crisis that threatens to hurl millions into poverty across Africa, Latin America and Asia. When many of the world’s poorest countries last found themselves unable to service their debts 25 years ago, the U.S. led a global effort — the 1996 Highly Indebted Poor Countries Initiative — to forgive much of that debt.

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Global Debt to Hit $200 Trillion

Global debt is set to reach $200 trillion, or 265% of the world’s annual economic output, by the end of the year, S&P Global has forecast - although it doesn’t expect a crisis any time soon, Reuters reported. The credit ratings giant said it amounted to a 14-point rise as a percentage of world GDP, having been amplified by both the economic plunge caused by COVID and the extra borrowing that governments, firms and households have had to resort to. “Global debt-to-GDP has been trending up for many years; the pandemic simply exacerbated the rise,” S&P’s report said.

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Negotiations between the International Monetary Fund and Argentina over a new IMF loan program are “very fluid and constructive,” with Argentine officials expected to come to Washington in the coming days for more talks, IMF spokesman Gerry Rice said on Thursday, Reuters reported. Rice told a regular news briefing that a recent IMF staff mission to Buenos Aires, made “good progress” in defining the initial elements of Argentina’s economic reform plans.

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Argentine officials will travel to the United States on Thursday to meet with the International Monetary Fund (IMF), as the country renegotiates already-disbursed loans of about $44 billion, a government source told Reuters on Wednesday, Reuters reported. The fund said at the end of November that it had begun to outline, together with Argentina, a new program to help the government face the country’s profound economic and social challenges, which have been aggravated by the COVID-19 pandemic.

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Brazil’s government will pardon about half of the roughly 14 billion reais ($2.6 billion) in debt owed to it by Brazilian telecom firm Oi SA, the country’s solicitor general said on Friday, Reuters reported. Oi, which has been working to emerge from bankruptcy protection for years, had accumulated gargantuan fines tied to quality of services and other regulatory demands, making telecoms regulator Anatel one of the company’s biggest creditors. The settlement, with the remainder of Oi’s government debt payable in installments, puts an end to 1,700 ongoing court cases between Oi and Anatel, sa

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Airlines are on course to lose a total $157 billion this year and next, their main global body warned on Tuesday, further downgrading its industry outlook in response to a second wave of coronavirus infections and shutdowns afflicting major markets, Reuters reported. The International Air Transport Association (IATA), which in June had forecast $100 billion in losses for the two-year period, said it now projects a $118.5 billion deficit this year alone, and a further $38.7 billion for 2021.

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The trio of coronavirus vaccines racing toward approval may reach the masses too late to prevent another round of airline failures, Bloomberg News reported. With last week’s insolvency filing at Norwegian Air Shuttle ASA, some 42 airlines worldwide have failed or entered administration this year, according to research from consultant IBA Group. The tally may surpass 70 through March, as rising cases weigh on revenue and carriers struggle to secure fresh funding. “The fourth quarter and the first quarter of next year could be equally terrible,” IBA’s Stuart Hatcher said in an interview.

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