Argentina Says It Aims to Avoid Default Amid Lockdown Extension

Scott Squires and Patrick Gillespie

(Bloomberg) -- Argentina said it will still try to avoid a costly default, even as it extends a nationwide lockdown to stop the spread of coronavirus.

President Alberto Fernandez said that the country would still prioritize avoiding a default on its overseas debt, even though the already struggling economy will be hampered by a government-ordered lockdown, now in effect until April 12.

Fernandez’s assurances comes as Argentina tries to renegotiate $69 billion in overseas debt and rework a deal with the International Monetary Fund, a process that began before the virus led to a historic crash of global markets. Argentina had originally said it hoped to reach an agreement with private creditors by March 31, but later conceded that the deadline might be altered.

“It’s never good to be in default. Our idea is the same as it was on Day 1: We need time,” Fernandez said in a interview on local station Radio con Vos. “Today we cannot pay and now have more support for that argument.”

Fernandez also said that Brazilian President Jair Bolsonaro’s attitude has complicated Argentina’s efforts to stop the virus’ spread. A lack of measures could cause Brazil to “enter the same spiral as Italy,” one of the hardest-hit countries by the virus.

Argentina has been praised for its aggressive measures to stop the spread of COVID-19, closing the country’s borders and halting most foreign and domestic flights before announcing a countrywide lockdown March 19. Argentina’s GDP is now expected to contract 5.4% in 2020 from 1% previously, according to a Goldman Sachs forecast.

Read more: Argentina Sacrifices Economy to Ward Off Virus, Winning Praise

Argentina’s financial response to the crisis has included measures like extra payments for low-income parents and retirees, a 10,000-peso ($155) transfer for informal and some independent workers in April, and a price freeze on 2,300 essential products.

As of March 30, Argentina has reported 820 cases of the virus and 21 deaths.

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