Argentina Starts to Settle Its Debts

Argentina took one step closer to normalizing its financial relationship with the outside world May 29, when the government announced a deal that would settle outstanding debts with the Paris Club, a group of 19 public creditors including mostly European countries, the United States, Canada, Australia and Russia. After 13 years of default, Argentina has promised to pay back a total of $9.7 billion over the next five years, with the first payment of $1.15 billion to be paid in two installments in July 2014 and May 2015.

Resuming payments will open the door for these public creditors to once again lend money to Argentina. Thus, the deal is an important phase in the process of Argentina's regaining access to international credit markets, which Buenos Aires will need if it hopes to avoid an economic crisis. Argentina is betting that it can eventually revive its energy sector and once again return to its status as a net exporter of natural gas and oil, a transition that will affect the entire region.