* Paris Club set May date for debt negotiations
* Germany, Japan biggest holders of debt
* Argentine needs to regain access to markets
By Leigh Thomas
PARIS, March 14 The Paris Club invited the
Argentine government on Friday to negotiate paying off its
overdue debt, with talks starting in the week of May 26 to take
an important step towards settling the long-running debt
Eager to settle disputes with its creditors, Argentina
outlined its conditions in January to repay the roughly $9.5
billion it owes Paris Club members.
"They discussed this proposal in January and February, asked
for clarification and, based on a revised proposal, have invited
the government of Argentina to come negotiate an arrears
clearance agreement with the Paris Club creditors in May in
Paris," secretary general Clotilde L'Angevin told Reuters.
In Buenos Aires, Argentina's economy ministry issued a
statement. "The members of the Paris Club have invited us to
start formal negotiations toward the end of May," it said.
"Our proposal seeks to develop investment inflows with the
objective of confronting new challenges, after a period of 10
years of high and sustained economic growth," it added.
Argentine over-the-counter bond prices rose as much as 2.7
percent on the news of the invitation.
An arrears clearance agreement is not the usual debt
rescheduling based on an IMF programme. It would cover
principal, interest and late arrears.
In the absence of an IMF programme, which Argentina has
ruled out, Paris Club rules forbid any reduction in the value of
the country's debt.
Germany is Argentina's biggest Paris Club creditor with
about 30 percent of the debt, followed by Japan with about 25
percent. Smaller holders include the Netherlands, Spain, Italy,
the United States and Switzerland.
A deal with its creditors for a settlement would help open
up new sources of international funding for Argentina. It has
been shut out of capital markets for more than a decade since
Argentina and Paris Club members came close to striking a
deal in 2008 but the government pulled out at the last moment,
concerned about its falling foreign exchange reserves in the
midst of the global financial crisis.
With its dollar reserves dwindling, Buenos Aires has been
eager to secure a deal that does not put too much strain on its
balance of payments.
Argentina's debt to the Paris Club is a legacy of its
2001-02 economic crisis, which culminated in a roughly $100
billion debt default.
The country's history with the informal group of mostly
Western nations goes back to the Paris Club's origins in 1956,
when Argentina agreed to meet its public creditors in Paris.