(Bloomberg) -- Argentina’s new government wants to continue making debt payments while it renegotiates with creditors in the coming months, central bank chief Miguel Pesce said Wednesday.
“What the government has already said is that it doesn’t want during this negotiation period for some maturity to end up provoking an unwanted default,” Pesce said at the American Club in Buenos Aires, one of his first public speaking events since assuming office Dec. 10.
Pesce added that President Alberto Fernandez’s government has already shown its commitment to paying down debt by covering a maturity last week, and he said “it’s already working with bondholders to see if they can reach some type of agreement for the maturity we have next week.”
Argentina has roughly $39.3 billion in interest and principal denominated in pesos and dollars coming due to private creditors next year, according to government data. Analysts estimate that Argentina’s net reserves -- the money it’s been using to pay down debt recently -- range between $10 billion to $12.5 billion.
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Fernandez insists the government wants to pay, but the current state of economy makes it impossible and the government must renegotiate. His economic team hasn’t yet detailed how they plan to change the government’s debt profile.
On Tuesday, Fernandez sent a so-called emergency bill to Congress, which included a clause requesting authorization for the government to sell $4.6 billion in notes to the central bank in order to use its reserves to pay down dollar debt.
“This is an extreme resource, but it’s essential during this negotiation period,” Pesce added.
Pesce said Fernandez’s yet-to-be announced social pact, which will cover issues such as prices and salaries, will be a key mechanism to cool inflation.
If the pact is successful, Pesce said the central bank can “substantially” lower interest rates, which stand a 63%, the highest in the world. He ruled out cutting rates below annual inflation levels, which stand above 50%.
