Argentina’s Senate launched a debate on Wednesday over a plan to settle debts with vulture funds, expected to be approved after being passed with ease in the lower house of Congress last week despite major protests against the move to comply with holdout creditors.
Although President Mauricio Macri’s Let’s Change coalition has just 16 of the 37 seats in the Senate needed to pass the measure, enough representatives have expressed support for it, including members of former President Cristina Kirchner’s Front for Victory, EFE reported.
Nevertheless, a heated debate is expected to last around 10 hours, following an even longer marathon debate over the issue in the lower house.
If approved, the package will pave the way for the country to settle its decades-long battle with predatory creditors and pay off lenders who refused to accept debt restructuring after Argentina defaulted in 2002.
Under former President Fernandez, the country refused to pay the vulture funds, and saw some success in U.S. appeals courts.
But the case has ultimately resulted in a win for vulture funds, setting a dangerous precedent that could empower predatory lenders by showing that it can be to their advantage to hold out and reject debt restructuring. Such a precedent will impact some of the poorest and most vulnerable countries in the world, a U.N. debt expert recently told teleSUR.
U.S. District Judge Thomas Griesa has recently moved to allow Argentina to pay the 93 percent of its debt that was restructured, previously prohibited under injunctions that held creditors hostage in favor of vulture funds.
Argentina will now have to go into more debt to pay off the holdout lenders. The lifting of injunctions in the U.S. appeals court, however, will importantly give the country renewed access to borrow money at competitive rates.
Meanwhile, Macri plans to send a clear message during a visit to Washington this week that Argentina is ready to bring an end to the dispute with vulture funds and default position, Argentina’s La Nacion reported.
Macri came to power last year on promises to reopen negotiations with vulture funds in the name of attracting international investment to kickstart the economy.
Argentina’s 15-year battle with vulture funds stems from the fact that a handful of holdout creditors rejected the debt restructuring that followed Argentina’s US$100 billion debt default in 2002.