Argentina vows to pay back billions to its creditors

Argentina’s decision to pay off its debts to some of the world’s richest nations has been met with surprise, but also concern, by the country’s business community.

President Cristina Fernandez de Kirchner said Buenos Aires would tap foreign reserves to repay 6.7 billion dollars in loans, outstanding since Argentina’s economic crisis at the start of the decade.

The money was lent to Argentina by the Paris Club, which includes Japan, the United States and various European countries.

Industry executives gave the president a standing ovation.

Olvaldo Cornide, the president of a federation for medium-sized businesses, said: “This reimbursement to the Paris Club, in my opinion, will radically change Argentina’s financial status.”

Argentinian businesses have found it difficult to get international credit because of the debt.

But questions are being raised about Argentina’s ability to fund rising public spending if it dips into its reserves.

Argentina recently paid off debts to the IMF but ironically that meant it couldn’t restructure its debt to the Paris Club.