The government of La Rioja informed the market on Monday that it would not be able to service its debts for about 30 days 26.2 million dollars citing high inflation, devaluation and the alleged withdrawal of participable funds, for which it has expressed its intention to initiate a consultation process with its bondholders for a renegotiation. The novelty appears in the middle of fierce fight between the national government and the provinces for discretionary transfers of funds. And weeks after the province governed by Ricardo Quintela approved the issuance of a quasi-money provincial, the “Chacho”.
In a statement the Province claims that “faces limitations in its ability to pay principal and interest with a payment date of February 24, 2024 with international bonds expires in 2028” and that consequently it is “analyzing and evaluating the best way to approach the management of its financial commitments”.
The province was faced with $26.2 million in payments originally due last Saturday.
The placement of public debt consists of a green bond issued in 2017 for $200 million, with an annual interest rate of 9.75%.
The note signed by the Minister of Finance, Jorge Quinteroexplained that La Rioja “is facing unprecedented economic challenges.”
“The contraction of the Argentine economy, high inflation and the devaluation of the exchange rate have had a direct effect on the economy of the Province, causing a serious decrease in tax collection at the provincial level,” he added.
The minister also underlined that “the province has not received shared funds, as established by article 83 of law 27.701” referring to the 2023 national budget, reconvened for 2024, making the province’s revenues “insufficient to cover expenses related to services essentials and programs”.
“These factors have significantly limited the Province’s ability to meet its financial commitments, including bonds,” Quintero said.
Given this financial situation, the province announced the hiring of financial and legal advisors and said it “intends to initiate consultations with the bondholders with the aim of reaching an amicable and consensual agreement with them as quickly as possible.” “.
In this sense, and attentive to the outcome of the preliminary talks with investors, the Province anticipated that “it will do its best to pay the amount of interest due starting from 24 February 2024 as soon as possible”.
The Government of La Rioja claims that the nation accumulates a total debt of 302,885 million dollars with the province, whose appeal was formalized last week before the Supreme Court of Justice, together with a request for Declaration of Certainty Action on the nullity of DNU 70/2023 and for a precautionary measure against the non-payment of trust funds.
Source: Clarin
