Page last updated at 06:12 GMT, Wednesday, 3 September 2008 07:12 UK

Argentina to pay back $6.7bn debt

Argentina President Cristina Fernandez
President Fernandez wants to clear Argentina's debts to other nations

Argentina has pledged to repay the entire $6.7bn (3.7bn) of defaulted debt still owed to foreign governments after the 2001-2002 economic crisis.

President Cristina Fernandez said Argentina would use about one sixth of the nation's reserves to pay the debt.

Argentina defaulted on $95bn of bonds in 2001, a record amount at the time.

The move to repay the Paris Club of investors was seen positively by analysts who said it would make investing in Argentina more attractive.

"It's positive in that it shows a willingness to pay," said Christian Reos, an analyst at Allaria Ledesma brokerage.

He added that it "could open up financing at better interest rates for Argentine companies".

Ms Fernandez's predecessor, Nestor Kirchner, had restructured most of the debt, and repaid money borrowed by the International Monetary Fund.

But the debt owed to the Paris Club has remained unpaid.

US State Department spokesman Sean McCormack said the latest move represented "an important first step in the consolidation of Argentina's position in international markets".

The Paris Club represents the rich nations that provide government-to-government lending to poorer countries. They include the UK, Germany, the US, Japan, France and Australia.

Argentina has already settled its debts with private sector creditors, who were forced to take a severe "haircut" and receive far less than the face value of their debts.

Since the crisis, Argentina's economy has recovered strongly, but inflation is a growing concern.


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