Argentina says it can meet debt payments through 2027
BUENOS AIRES, July 6 (UPI) -- Argentine Economy Minister Luis Caputo announced Monday a financing plan aimed at ensuring the country can meet its public debt obligations through the end of 2027 without returning, for now, to international bond markets.
Speaking at a news conference, Caputo said President Javier Milei's administration does not plan to raise money from foreign investors through new international bond sales.
Argentina has a long history of debt crises, and it has relied on external borrowing for decades to finance fiscal deficits. The Milei administration said it aims to reduce that dependence by relying more heavily on the domestic capital market and financing from multilateral institutions.
"The objective is to refinance maturities at the lowest possible interest rate, as anyone would do with their debts," Caputo said. "Refinancing at a low rate is very important."
Caputo described the strategy as a "conservative" approach and said returning to international capital markets, including Wall Street, remains an option, but is not a priority.
The minister said the government received offers to issue about $5 billion in 10-year bonds but rejected them because they carried interest rates of about 12.5% annually.
Caputo argued Argentina has regained access to private international financing, but said current borrowing conditions remain unattractive.
He said accepting the proposed terms would have increased interest payments by about $3.3 billion over the life of the debt.
"The interest rate should not be underestimated. That is why we are working consistently to lower the country's risk premium," he said.
Country risk is a measure of the additional interest investors demand to lend to a country compared with U.S. government debt. Lower country risk generally reduces borrowing costs.
Caputo also said the government wants to develop Argentina's domestic capital market so both the public and private sectors can obtain financing within the country.
"The country needs a more developed domestic capital market. Every developed country has a much deeper capital market. Argentina has an excessive dependence on foreign financing that should be reduced," he said.
The minister said the government expects slowing inflation, balanced public finances and lower country risk to improve Argentina's financing conditions over time.
"When you have macroeconomic stability, as this government does, the passage of time is an ally, not a problem," he said.
Caputo said the government aims for Argentina to achieve investment-grade status by the end of a potential second Milei administration.
"This is an objective, not a promise. It does not depend solely on us, but we believe it is achievable," he said.
Investment-grade status is assigned by international credit rating agencies to countries considered to present relatively low credit risk. The designation generally allows governments to borrow at lower costs and helps attract additional investment.
"By 2031 we expect to meet all the required metrics. Investment-grade status is very important for Argentines. It means macroeconomic stability, inflation in line with international standards, greater exchange-rate stability, more investment, more jobs and higher productivity. It will benefit all Argentines," Caputo said.
Under the government's plan, Argentina expects financing needs of $19.2 billion in 2026. Officials project securing $22.9 billion through a combination of foreign currency purchases from the Central Bank, domestic debt issuance, loans from international organizations, disbursements from the International Monetary Fund and privatizations.
The projected $3.7 billion surplus would help cover debt payments next year.
For 2027, the government estimates financing needs of $24.9 billion, which it expects to cover through that surplus, additional domestic debt issuance, IMF disbursements, financing from other multilateral institutions, privatizations and other funding sources.
The plan does not specify any potential international bond issuance, as the government said it would return to global markets only if borrowing costs become more favorable.
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