Al Ain newsletter Agencies
Wednesday 6/5/2020 02:46 AM Abu Dhabi time
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Argentina cut its economic forecast for 2020 sharply due to a pandemic Corona virus emerging (Covid 19).
According to an analysis by the government, the economy is expected to contract by 6.5% this year as activity falters due to public isolation measures in the country and weak global demand.
In March the government expected the economy to contract between 1.0% and 1.5%.
In its latest estimate, the Ministry of Economy predicted on Tuesday that growth in 2021 would reach 3%, unchanged from previous forecasts in March that did not include the consequences of the virus.
The new forecast indicated that the South American country is likely to record an initial budget deficit of 3.1% of GDP this year, up from earlier forecasts ranging from 1.1% to 1.5%.
Argentina, the third largest economy in Latin America, has suffered a recession since 2018 and faces tough negotiations this month with private sector creditors to restructure about $ 65 billion in foreign debt.
The International Monetary Fund, in a statement issued last February, described the debt burden of Argentina as being above the tolerance level.
The fund added that a “meaningful contribution” is required from bond holders in the private sector to restore the country’s debt sustainability, according to Bloomberg News.
The International Monetary Fund announced, earlier, its refusal to exempt Argentina from the repayment of part of the loan of 44 billion dollars, knowing that the country’s total debt is 311 billion, or about 92% of the total output.
Of the $ 311 billion, the government is trying to reschedule $ 122 billion in bonds held by international private investors, and the $ 73 billion table is loans made with creditors, whether bilaterally or multilaterally.
As for the rest of the public debt, which amounts to about $ 116 billion, it is an internal debt of several parties, most notably the Central Bank, the National Bank of Argentina, and the pension system.
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