Paris Club: “It's a good decision, if it's confirmed an implemented”

Xavier Musca, president of the Paris Club

The Paris Club will work together with Argentina on the way to settle its debt of about 6.7 million dollars, before creditor nations' meeting in September, said Paris Club president, Xavier Musca.

One day after President Cristina Fernández announced her government would use Argentine Central Bank reserves to repay its debt with the Paris Club, outstanding since 2001-2002 economic crisis, Musca praised the announcement for considering it positive for Argentine economic credibility.

"We consider that Argentina is taking a good decision if all of this is confirmed and implemented," said Musca to Reuters news agency in a phone interview.

"No decision can be made without unanimous agreement of all creditors. We will meet on September 15 (already scheduled) and discuss Argentina's debt," he added.

He explained that, until that date, the Paris Club will hold talks with the Argentine Economy Ministry about how much is owed to each country, and the number of expected payments.

The 6.7 billion dollars considered for the settlement of the debt consisted of outstanding payments since the days of Argentine economic crisis, although Argentina had an existing debt of a total 7.9 billion dollars with the Paris Club, said Musca.

The difference between both figures included the debt that does not need to be paid immediatly to Paris Club creditors, he added.

Among the creditor nations that can expect debt repayment are Germany, Japan, Spain, Holland, France, the United States, Italy, and Switzerland.

Separate debt contracts were probably denominated both in dollars and euros, depending on the creditor nation, he held.

Musca said Argentina's plan to use international reserves to settle its debt had been used before.

Argentina had already used the same method to settle its debt with the IMF in the past, while Angola had used its international reserves to pay off its debt with the Paris Club last November, he said.

The announcement made by Argentina on Tuesday, in a speech delivered by Cristina Fernández and broadcast to the whole country, coincided with a moment in which many economists were questioning Argentina's capacity to meet its increasing financial needs for 2009, due to high public expenditure.

Argentine Central Bank has about 47 billion dollars of international reserves, but the government had previously refused to use these funds to settle its debt.