☐

-

disrupted our ability to attract and retain personnel could be adversely affected.

On February 6, 2020, the Borrower, entered into a Second Amended and Restated Credit Agreement (the “Second A&R Credit Agreement”), by and among certain financial institutions listed therein, as lenders, and HSBC Bank USA, National Association, as administrative agent, issuing bank and swingline lender. Under the Second A&R Credit Agreement, which amends and restates the existing A&R Credit Agreement, dated as of November 1, 2018, the Borrower may borrow (i) up to $100 million in up to four borrowings on or prior to August 6, 2021 under a delayed-draw term loan facility and (ii) up to $250 million under a revolving credit facility. In addition, the Borrower may request increases of the maximum amount available under the revolving facility in an aggregate amount not to exceed $100 million. The maturity date of each of the facilities is February 5, 2025. Pursuant to the terms of the Second A&R Credit Agreement, interest on the loans extended thereunder shall accrue at a rate per annum equal to either (i) LIBOR plus 1.50%, or (ii) LIBOR plus 1.75%, determined based on the Borrower’s Maximum Total Leverage Ratio (as defined in the Second A&R Credit Agreement). The Borrower’s obligations under the Second A&R Credit Agreement are guaranteed by the Company and its subsidiary Globant España S.A., and are secured by substantially all of the Borrower’s now owned and after-acquired assets. The Second A&R Credit Agreement also contains certain customary negative and affirmative covenants, which compliance may limit our flexibility in operating our business and our ability to take actions that might be advantageous to us and our shareholders.

As of December 31, 2020, $25.0 million was outstanding under the Second A&R Credit Agreement.

There are other examples of government intervention. In December 2012 and August 2013, the Argentine Congress established new regulations relating to domestic capital markets. Such regulations generally provided for increased intervention in the capital markets by the government, authorizing, for example, the Argentine Securities Commission (Comisión Nacional de Valores or "CNV") to appoint observers with the ability to veto the decisions of the board of directors of companies admitted to the public offering regime in Argentina under certain circumstances and suspend the board of directors for a period of up to 180 days. On May 9, 2018, however, the Argentine Congress passed the Productive Financing Law No. 27,440, which reformed, among others, the Capital Markets Law No. 26,831 abrogating this power granted to the CNV and generally modernizing the entire regulatory framework applicable to the Argentine capital market, by incorporating current international practices to contribute to its development.

Since December 2019, Frente de Todos (a new coalition formed to participate in the general elections) returned to power with Mr. Alberto Fernández, as president and former president Cristina Kirchner, as vice-president. The new administration has recently adopted, and may continue to adopt, several measures that could imply further government intervention.

The results of the negotiations on the restructuring of the International Monetary Fund’s three-year Stand-By Arrangement for Argentina could have an adverse effect on the Argentine economy in general and our business in particular.

In late May 2018, the Macri administration requested the IMF financial support to help strengthen the Argentine economy in light of the financial market turbulence suffered in early 2018. In June 2018, Argentina and the IMF reached an agreement on an economic plan that could be supported by IMF financing in the form of a Stand-By Arrangement for $50 billion, and on June 20, 2018, the IMF’s Executive Board approved such plan and the consequent three-year Stand-By Arrangement. On September 2018 the Argentine government negotiated an extension to the Stand-By Arrangement from $50 billion to $57.1 billion. As of December 2019, the IMF disbursed an aggregate of US$44.70 billion and as of the date of this annual report there were additional disbursements pending for a total of US$12.40 billion.

The purpose of the Stand-By Arrangement was to support the Argentine government’s economic priorities, which include strengthening the Argentine economy and protecting the living standards of the Argentine citizens. The Fernández administration announced that would not request the disbursements of the pending amounts under the Stand-By arrangement and is negotiating the extension of the repayment terms that mature in 2021 and 2022.

As of the date of this annual report, we cannot guarantee that the Argentine government and the IMF will reach an agreement on the restructuring of the Stand-By Arrangement, nor are we able to predict the future consequences for the Argentine economy in general or our business in particular if such agreement fails.

Argentina's ability to obtain financing from international markets may be limited, which may in turn impair its ability to implement reforms and public policies and foster economic growth and could impact the ability of Argentine companies to obtain financing outside of Argentina.

Argentina's

In FebruaryMarch 2016, the Macri´s administration entered intoArgentine government reached settlement agreements with holdout bondholders holdingholders of a significant portion of the defaulted bonds unchanged and has repaid the majority of the holdout creditors with the proceeds offrom a US$16.5 billion international offering of 3-year, 5-year, 10-year and 30-year bonds in April 2016.bond offering. Although the size of the claims involved has decreased significantly, litigation initiated by bondholders that have not accepted Argentina'sArgentina’s settlement offer continueshave continued in several jurisdictions.

Additionally, foreign shareholders of several Argentine companies have filed claims with the ICSID alleging that the emergency measures adopted by the Argentine government since the crisis in 2001 and 2002 differ from the just and equal treatment standards set forth in several bilateral investment treaties to which Argentina is a party. ICSID has ruled against Argentina with respect to many of these claims.

In January 2018, a new claim against the Argentine government was submitted by the fund “Draw Capital Partners” in New York in relation to certain interests due between 2014 and 2016. This claim has reopened discussions around Argentina’s foreign debt, despite the agreement reached by Macri’s administration to overcome the default.

In addition, in January 26, 2020 the Province of Buenos Aires, the largest estate in Argentina, also had a maturity of provincial sovereign debt for US$277 million in principal amount and interests that, after the failure of the negotiations for an extension, canceled within the curing period in February 5, 2020. The Province of Buenos Aires has additional payments under its sovereign debt for US$110 million maturing in May 2020 and US$750 million maturing in June 2020. The Province will seek to restructure its sovereign debt in U.S. dollars simultaneously with the restructuringterms of the Argentine sovereign debt.

Because the Argentine government is facing maturitiesgovernment’s existing debt instruments, approximately US$69.7 billion of sovereign debt in U.S. dollarsforeign currency and Argentine pesos matured in 2020.

Argentine government’s public debt.

Due

On February 12, 2020, the Argentine Congress enacted the Law No. 27,544 for the Restoration of the Sustainability of the Public Debt issued under Foreign Law, which granted the Ministry of Economy the power to restructure the Argentine government external public debt.

If the Argentine government doesforeign exchange market are not restructure the sovereign bonds with the required majority of holders (at least 75% in principal amount) Argentina may default on the sovereign debt again. In such event, Argentina'seffective, Argentina’s ability to obtain international or multilateral private financing or direct foreign investment may be limited, whichlimited. This may, in turn, impair its ability to implement reforms and public policies to foster economic growth, impair the ability of private sector entities to access the international capital markets or make the terms of such financing much less favorable thatthan those accessible by companies in other countries in the region andregion. Additionally, it may accelerate the depreciation of the Argentine peso, foster inflation and deepen the economic crisis and recession. In addition, Argentina may face again litigation from sovereign debt holdout holders.

As a consequence of inflation since 2018, in August 2019, the Argentine government issued a decree eliminating the VAT on certain basic food products until December 31, 2019. However, the Argentine Supreme Court issued an injunction stating that the fiscal costs of the VAT reduction must be borne only by the federal government, and could not affect the co-share of the Provincial Estates. Elimination of the VAT on those products, however, was not extended beyond December 31, 2019. The Macri administration favored the financing of the fiscal deficit through the issuance of new debt in the international debt markets. The fiscal, monetary and currency adjustments undertaken by the Macri administration subdued growth in the short-term. Immediately after most of the foreign exchange controls were lifted on December 10, 2015, the dismantling of the multiple exchange regime resulted in the official Argentine peso exchange rate (available only for certain types of transactions) falling in value by 40.1%, as the Argentine peso-U.S. dollar exchange rate reached Argentine pesos 13.76 to US$1.00 on December 17, 2015. As of December 2016, the Argentine peso depreciated 22.15% and as of December 2017, the Argentine peso depreciated 18.45%. During 2018, the Argentine peso has depreciated 103.83% accumulating a total depreciation of 284.84% since December 16, 2015 (immediately after most of the foreign exchange controls were lifted and dismantling of the multiple exchange regimes). Between December 31, 2018 and April 30, 2019, the Argentine peso depreciated 16.4% against the U.S. dollar. For containing the escalade of the Argentine peso-U.S. dollar exchange rate, during 2018 the Central Bank sold more than US$14 billion, reducing the Central Bank reserves; and increased the Argentine peso interest rates to more than 70%, affecting the access to domestic financing. All the foregoing caused a deepening recession (the GDP(GDP decreased 6.2% in 2018 and 1.7% in 2019), increasing unemployment and medium and small companies failures, while high inflation and foreigncompanies’ failures. However, in 2020, the general macroeconomic conditions worsened as a result of the COVID-19 pandemic. According to INDEC, during the second quarter of 2020, GDP declined by 19.1% year over year (which represented one of the most significant declines of the GDP in Argentine history) with a peak of 16.2% in the second quarter compared to the first quarter of 2020. Further, during the third quarter of 2020, economic activity declined by 10.2% year over year. These conditions also led to an increase in poverty, which, according to INDEC, as of June 30, 2020 affected more than 40.9% of the population.

In addition, during 2018rate, the Argentine government used the issuanceCentral Bank has been selling its reserves of local short term Treasury Bills to finance fiscal deficit and control the foreign exchange rate through the absorption of Argentine pesos, such as Letras del Tesoro (LETES), Letras del Tesoro Capitalizables (LECAP), Letras del Tesoro en Pesos Argentinos Ajustadas por el CER (LECER) y Letras del Tesoro Atadas al Tipo de Cambio (LELINK), raisingU.S. dollars, which has resulted in a decrease in the Argentine peso interest rates. In August 2019, by Decree No. 596/2019 the Argentine government restructured the maturityCentral Bank's international reserves from US$65.7 billion as of the LETES, LECAP, LECER and LELINK without haircuts, pursuantDecember 31, 2018 to which the principal amount under such Treasury Bills held by institutional holders will be paid in installments pursuant to the following schedule: (i) 15% on the maturity date; (ii) 25% 90 calendar days from the maturity date; and (iii) 60% 180 calendar days from the maturity date. InUS$39.4 billion as of December 2019, pursuant to Decree No. 49/2019, the Fernández administration extended the LETES´ maturity until August31, 2020.