Ending years of financial isolation and court battles, Buenos Aires has acceded to repaying its creditors. If the senate had rejected the payment deal, the debt would have likely gone viral, an opposition lawmaker said.
The Argentine Senate on Thursday approved a deal to pay back US creditors, effectively ending a 14-year court battle after defaulting on $100 billion (€88.35 billion) in debt in 2001, DW reported.
Following over 13 hours of debate, the deal—which passed Argentina’s lower house two weeks ago—passed the senate vote with 54 in favor and 16 against.
Under the deal, Argentina is expected to pay out over $4 billion (€3.53 billion) in claims related to court cases.
It also allows Argentina to take on $12.5 billion in debt to settle the holdout creditors’ disputes.
In 2005 and 2010, several US creditors agreed to swap their holdings for bonds worth far less than their original stakes.
But a handful of holdout creditors refused to settle on Argentina’s debt restructuring in the wake of the historic default, instead taking Buenos Aires to court to force the country to comply with its original credit terms.
The deal marks a victory for Argentine President Mauricio Macri, who campaigned on a conservative platform of rehabilitating the economy through several measures, including negotiating an end to the years-long dispute.
Ahead of the vote, Senator Miguel Pichetto, leader of the senate’s opposition Peronist bloc, said he would vote in favor of the agreement since inaction would lead to dire consequences.
“It’s much more complicated for the country not to agree (to pay) than to agree,” Pichetto said. “The debt could accelerate and go viral.”
Ex-president Christina Fernandez de Kirchner, Macri’s leftist predecessor of the Peronist party, refused to negotiate with creditors, describing them as “vultures.”
The agreement paves the way for Argentina to once again enter international capital markets after years of isolation due to the blowback from its default.
The country of 43.4 million people has a literacy rate of over 98%, enormous natural resources, a vibrant export-oriented agricultural sector and a diversified industrial base.
