Argentina's Lower House Passes Debt Bill to Settle With Holdouts

  • Lower house voted 165 for with 86 against in favor of bill
  • Argentina needs to resolve dispute to return to credit markets

Lawmakers in Argentina’s lower house of Congress voted Wednesday to approve a bill that seeks to end a 15-year legal battle with disgruntled creditors from the 2001 default which would pave the way for the nation to return to international capital markets.

Lawmakers voted 165 for and 86 against to support a package of measures that calls for the repealing of two laws that prevent the government from paying some creditors, the approval of the accord which calls for settling at a discount of about 25 percent and permission to issue about $12 billion of debt to pay holdouts. The bill now goes to the senate for final approval.

President Mauricio Macri is seeking to put an end to a dispute that has isolated Argentina financially as he seeks to close the largest fiscal deficit in nearly 20 years and tame inflation of 30 percent. The government, which doesn’t have a majority in either house, was obliged to grant some concessions to the opposition in order to secure enough votes. Macri is trying to obtain congressional approval for the plan and the issuance of billions of dollars in bonds before an April 14 deadline established with creditors.

While the opposition alliance has the majority in the Senate, it is riven by divisions and most of their legislators will be open to bargaining in exchange for funds that benefit their provinces. Most of the provinces also have a pressing need to access international credit at lower borrowing costs.