Argentina sees 'deep debt restructuring' ahead, rejects fiscal austerity

[BUENOS AIRES] Argentina is willing to pay its debts but does not have the money to do so, Economy Minister Martin Guzman said on Wednesday warning the country was headed for "a deep debt restructuring."

In an address to Congress, the minister blamed austerity policies prescribed by the International Monetary Fund for the credit crisis.

But as IMF officials arrived in Buenos Aires for a week of high-stakes talks about the coming revamp of loans and bonds, Mr Guzman said there was "a growing mutual understanding" between it and the government about how to handle the problem.

Argentina says it needs to rejig US$100 billion in debt, including US$44 billion owed to the fund, its biggest single creditor.

The government, which took office in December, has vowed not to continue paying what it calls the unsustainable debt load it inherited from the previous administration.

"There will have to be a deep debt restructuring and it is clear there will be frustration on the part of bondholders," Mr Guzman told lawmakers. He vowed to rebuff the kind of fiscal austerity policies that the IMF typically recommends to cash-strapped countries seeking loans.

REUTERS