After two months of negotiations with creditor banks, Argentina announced Wednesday an agreement to renegotiate $32.8 billion of its $52 billion in foreign debt.
The refinancing was announced at a news conference by Treasury Secretary Mario Brodersohn and Juan V. Sourrouille, the economy minister.
The accord "specifically relieves the cloud the debt held over the national economy and by implication notes the beginning of a new economic stage," Sourrouille said.
The Argentine foreign debt is third-largest in the developing world, trailing Brazil and Mexico.
The accord comes at a particularly tough time for the Argentine economy, with inflation surging the past three months by 23%, double what the government had forecast. Inflation has averaged almost 100% the past 12 months.
Laborers unhappy with the declining value of their wages had grown increasingly vocal. Most of the 4-million-strong General Confederation of Labor, for example, staged a one-day walkout, which nearly closed down industry in Buenos Aires on Jan. 26.
The government, hoping to avert growing displeasure in the workplace, increased the minimum wage by 13% in January; in February, it devalued its currency by 7% and imposed a four-month wage and price freeze.
Early in negotiations with 11 main creditor banks that started Feb. 12, the government threatened to withhold payments on its foreign debt as Brazil did unless it received $2.15 billion required for interest payments and to promote national growth.
The government, saying it was not skirting its debt obligations, said poor international prices for its exports, particularly beef and grain, had worsened its economic plight.
With the new funds agreed to, and the refinancing complete, "the most immediate obstacles have been overcome," Sourrouille told reporters.
Brodersohn said Argentine negotiators "wanted an accord rapidly but one that was pragmatic with the international banks."
Full ratification of the accord is expected by June, Brodersohn said.
Of the $32.8 billion refinanced, $29.5 billion was from creditor banks, and the remaining $3.3 billion came from several sources, including commercial banks and international monetary sources, Brodersohn said.
Of the $29.5 billion refinancing by banks, $25.3 billion was with a 19-year payment term and a seven-year grace period. The remaining $4.2 billion includes a 12-year payment period with a five-year grace period, he said.