Extended deadline for Argentinian debt restructuring deal arrives

Argentina faces a new deadline today to secure a restructuring agreement on its foreign debt, as tensions escalate between government officials and international creditors.

After months of negotiations and several deadline extensions, the Argentine government released a final restructuring proposal for its $65 billion debt in early July. Since then, the negotiations have stalled over an impasse between creditors’ demands and the constraints of Argentina’s present economic situation.

A final debt agreement is key for recession-hit Argentina to avoid a protracted legal standoff with bondholders. The delay has already had significant consequences for the country’s long-term finances as well as government plans to boost tax revenue and curb the fiscal deficit. This has exacerbated poor growth prospects and shaken investor confidence, which will play a key role in the eventual national recovery.

With a growing group of creditors rallying behind a counter proposal and associated legal action, Argentina’s government will likely extend the deadline yet again until late August. While the extension could preclude the collapse of negotiations and a messier default, it will only serve to prolong Argentina’s growing financial predicament and further damage its international credibility.

Wake up smarter with an assessment of the stories that will make headlines in the next 24 hours. Download The Daily Brief.