The Paris Club invited the Argentine government on Friday to negotiate paying off its overdue debt, with talks starting in the week of May 26 to take an important step towards settling the long-running debt dispute.
Eager to settle disputes with its creditors, Argentina outlined its conditions in January to repay the roughly $9.5 billion it owes Paris Club members.
"They discussed this proposal in January and February, asked for clarification and, based on a revised proposal, have invited the government of Argentina to come negotiate an arrears clearance agreement with the Paris Club creditors in May in Paris," secretary general Clotilde L'Angevin told Reuters.
In Buenos Aires, Argentina's economy ministry issued a statement. "The members of the Paris Club have invited us to start formal negotiations toward the end of May," it said.
"Our proposal seeks to develop investment inflows with the objective of confronting new challenges, after a period of 10 years of high and sustained economic growth," it added.
Argentine over-the-counter bond prices rose as much as 2.7 percent on the news of the invitation.
An arrears clearance agreement is not the usual debt rescheduling based on an IMF program. It would cover principal, interest and late arrears.
In the absence of an IMF program, which Argentina has ruled out, Paris Club rules forbid any reduction in the value of the country's debt.
Germany is Argentina's biggest Paris Club creditor with about 30 percent of the debt, followed by Japan with about 25 percent. Smaller holders include the Netherlands, Spain, Italy, the United States and Switzerland.
A deal with its creditors for a settlement would help open up new sources of international funding for Argentina. It has been shut out of capital markets for more than a decade since its default.
Argentina and Paris Club members came close to striking a deal in 2008 but the government pulled out at the last moment, concerned about its falling foreign exchange reserves in the midst of the global financial crisis.
With its dollar reserves dwindling, Buenos Aires has been eager to secure a deal that does not put too much strain on its balance of payments.
Argentina's debt to the Paris Club is a legacy of its 2001-02 economic crisis, which culminated in a roughly $100 billion debt default.
The country's history with the informal group of mostly Western nations goes back to the Paris Club's origins in 1956, when Argentina agreed to meet its public creditors in Paris.