BUENOS AIRES, Argentina (AP) — Argentina announced Tuesday that it will delay paying principal on a peso-denominated bond that had been due this week while it works on restructuring an overall debt it says is unpayable at a time of economic hardship.

The announcement by the Economy Ministry comes ahead of’debt restructuring talks with a mission from the International Monetary Fund.

The ministry said payment of principal on the AF20 bond, which was issued in July 2018, will be put off until Sept. 30 “to be able to count on more time to be able to restructure this bond in a form consistent with the rest of the external debt restructuring. The payment had been due on Thursday.

It said it will continue to pay interest.

The center-left government of new President Alberto Fernández is attempting to restructure a foreign debt of some $100 billion, roughly half of which is owed to the IMF.

The Economy Ministry blamed the administration of former President Mauricio Macri for creating the debt problem, and for the AF20 bond.

“What it did was emit debt tied to the dollar in an unsustainable situation, a recipe to aggravate the problems,” it said. “What followed it known: the macroeconomic damage deepened, the Argentine peso depreciated significantly and as a consequence, the debt burden impose by this bond rose to still more unsustainable levels.”


Economy Minister Martín Guzmán has warned that Argentina needs “a sustainable solution” to paying its debt.

“Today the situation is critical, the debt burden cannot be sustained,” he said last month.

Argentina periodically faces financial crises and liquidity problems that have led it to refinance its debt. At the end of 2001, it declared a record default on just over $100 billion in debt during the worst economic crisis in its history. It is currently dealing with a contracting economy, high inflation and a weakened currency.

The new government this month offered a debt swap, but foreign investors who hold most of the debt rejected the plan.

“This government is not going to accept that Argentine society is held hostage by international financial markets, nor is it going to favor speculation over the welfare of the people,” the ministry said.

The announcement prompted a quick 3% drop on the Buenos Aires stock market.