"Debt Restructuring Negotiations Must Be Constructive"…138 Global Economists Back Argentine Government Support

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[Asia Economy Reporter Jeong Hyunjin] Renowned economists worldwide, including Joseph Stiglitz, a Nobel laureate and professor at Columbia University, have urged the creditor group negotiating debt restructuring with the Argentine government to take a "constructive approach," thereby supporting the government.

According to major foreign media on the 6th (local time), 138 economists from 20 countries issued an open letter urging the creditor group to take a "constructive approach" to the debt restructuring plan proposed by the Argentine government. The letter included Nobel laureates such as Professor Stiglitz, Edmund Phelps, University Professor at Columbia University, Jeffrey Sachs, Professor at Columbia University, Carmen Reinhart, Professor at Harvard University, and Thomas Piketty, Professor at Paris School of Economics (PSE) in France.

They stated that the Argentine government's spending priorities should be aimed at protecting citizens amid the health and economic crisis caused by COVID-19, emphasizing that "private creditors need to take action." They also highlighted that "Argentina has made a responsible proposal to creditors reflecting the country's repayment capacity," noting that creditors were already aware that their investments carried higher risks when they provided funds to Argentina.

The economists predicted that, as the COVID-19 pandemic impacts the global economy and weakens governments' debt repayment capacity, debt restructuring negotiations would benefit both the Argentine government and the creditor group. They forecast that "pressure on public finances will increase tremendously, especially for developing countries with already high debt levels." This is interpreted as a call to transition the debt crisis into a sustainable form through debt restructuring.

Professor Stiglitz is the mentor of Mart?n Guzm?n, the current Argentine Minister of Economy. After earning his Ph.D. from Brown University, Minister Guzm?n worked as a researcher at Columbia Business School. Following the release of the economists' open letter, Minister Guzm?n expressed gratitude on Twitter, writing, "Argentina is optimistic about reaching a debt restructuring agreement with creditors that will restore debt sustainability and enable economic recovery after the COVID-19 crisis."

Earlier, the Argentine government proposed to the creditor group a debt restructuring plan involving a three-year grace period on debt repayment, a 62% cut in interest, and a 5.4% reduction in principal on approximately $65 billion (about 80 trillion won) in debt. However, the creditor group, composed mainly of major asset management firms, has stated that they cannot accept this proposal, leading to a deadlock in negotiations. The deadline set by the Argentine government is the 8th. The 30-day grace period for interest payments on three types of dollar-denominated bonds ends on the 22nd, marking the potential point of default for Argentina. If negotiations fail by then, Argentina is expected to face its ninth default.

This content was produced with the assistance of AI translation services.