Buenos Aires: Argentina's Senate will vote Wednesday on a deal to repay disgruntled creditors, as the government seeks to end a 15-year legal battle over a catastrophic debt default.
The settlement deal is widely expected to clear its final legislative hurdle, after passing the lower house two weeks ago.
The bill paves the way for the government to pay more than $10 billion to so-called "holdout" creditors that rejected Argentina's efforts to restructure the debt it defaulted on in 2001.
Conservative President Mauricio Macri's administration has called the deal bitter but necessary medicine to end the country's status as a pariah on international capital markets.
Argentina has effectively been locked out of international finance since its nearly $100 billion default, the largest in history at the time.
It managed to persuade some 93 percent of creditors to take losses of 60 to 70 percent on their bonds, but lost a lawsuit in US federal court to hedge funds demanding full payment.
After years of combative relations with the holdouts -- dubbed "vultures" by former president Cristina Kirchner (2007-2015) -- Macri came to office in December promising to settle the dispute.
That more conciliatory approach is part of his larger push to reverse the slowdown of Latin America's third largest economy.
The pro-market president has spent a busy first four months undoing his leftist predecessors' protectionist legacy, devaluing the peso, scrapping import restrictions and slashing export taxes.
'Numbers say it all'
The new bill allows the government to take out up to $12.5 billion in loans to settle with the two US hedge funds that sued it -- Aurelius Capital Management and billionaire speculator Paul Singer's NML Capital -- as well as other remaining holdouts.
Its passage in the chamber of deputies was a major victory for Macri, who had to win opposition votes in a Congress where his party lacks a majority.
He looks set to pull off a similar coup in the Senate.
Kirchner's party, the Front for Victory (FPV), has 42 of the 72 seats. But nearly half its senators have reportedly caved in to pressure from the governors of their provinces, who need access to loans to fund infrastructure projects.
Support for the deal is far from universal in the politically polarized country, however.
The former economy minister who presided over the 2005 debt restructuring, Roberto Lavagna, called it a "bad and extremely costly" bargain.
"We settled $90 billion in debt with $35 billion. Now they're settling less than $5 billion with $12.5 billion. The numbers say it all," he said.
Macri's administration fires back that it is paying for the negligence of its predecessor, which scored political points attacking the "vultures" while letting the interest on the unsettled debt accumulate.
The president has warned that the alternative is hyperinflation and a painful economic adjustment.
AFP
