Following a marathon debate, President Mauricio Macri’s government won its first legislative triumph, as the lower house of Congress voted overwhelmingly in favour of a deal to settle with holders of Argentina’s defaulted debt.
At around 8.30am this morning – some 20 hours after the session began – 165 politicians voted in support of the government’s agreement with holdouts or so-called vulture funds. There were 86 votes against the proposal, and no abstentions.
With a minority in the lower house, Macri’s coalition (Cambiemos) secured the vote with support from several opposition groups, including those led by ex-presidential candidates Sergio Massa (UNA) and Margarita Stolbizer (GEN) and the ‘Justicialista’ bloc that recently broke away from the Kirchnerist Frente para la Victoria party (FpV).
The proposal will now be sent to the Senate, where the FpV holds a majority, with a vote expected in the final days of March.
The bill approved this morning contained three key elements: repealing the so-called ‘Lock’ and ‘Sovereign Payment‘ laws, and authorising the government to raise round US$12bn to settle the debt.
The two laws were approved under Kirchnerist governments in 2005 and 2014, respectively, as a way of safeguarding the deal to restructure of around 93% of the defaulted debt left from Argentina’s 2001 crisis.
President Macri has pushed to settle the debt with the vulture funds in order to allow Argentina to return to international credit markets.
Days before the debate, the president underscored the urgency of the agreement, saying in a TV interview the alternative for Argentina was “austerity and hyperinflation”.
The original government proposal was modified in the days leading up to the vote, and even during the debating session, as part of negotiations with opposition parties.
Some of the changes included limiting the amount of debt the government could issue to settle with the holdouts (set at around US$12.5bn), making the law conditional on the US court lifting current embargoes against Argentina, and assuring that new debt would be subject to ‘collective action’ agreements so that a small group of bondholders cannot affect the decision of the majority in any future restructuring.
The marathon debate include sharp criticism and tense exchange from different party groups.
Mario Negri, a legislator for the Unión Cívica Radical party within the Cambiemos coalition, questioned the previous government’s strategy regarding the vulture funds and accused it of “squandering” Argentina’s finances.
“Like it or not like, the strategy failed them. They are not the ‘Che Guevara’, they were not and are not now. They wasted the best opportunity Argentina had,” Negri confirmed.
Opposition leader Sergio Massa had clarified on Monday that his party would support the proposal, which he said left Argentina “with no access to credit markets that stopped investment. Without investment, people lack jobs.”
Meanwhile, former economy minister Alex Kicillof was critical of the proposal, stating, “It’s easy to settle by giving the vulture funds everything they want.” Kicillof also said that the deal would leave Argentina vulnerable to future claims, adding that “I have no doubt the vulture funds are going to ask for more.”
As the debate was beginning to take shape in Congress, thousands gathered outside to demonstrate against the bill. The protest was led by leftist and Kirchnerist groups such as La Cámpora, Partido Obrero, and Movimiento Evita.
City legislator José Cruz Campagnoli, of Nuevo Encuentro-FpV, told Página/12 that: “The people will keep fighting to defend our sovereignty even though Macri has knelt before the vulture funds.”