BUENOS AIRES (Reuters) - Argentina’s President, Mauricio Macri, won the support of the lower house of Congress for a settlement with bondholders on Wednesday, leaving Argentina one Senate vote away from ending a 14-year battle with creditors.
Lawmakers across the political divide voted 165 to 86 to approve the deal after a 20-hour televised debate.
Macri needs to close the festering dispute to tap global credit markets and lure back investors, and had warned Argentina faced a return to hyperinflation or aggressive spending cuts if the chamber had knocked down the proposal.
Legislators loyal to former leftist president Cristina Fernandez, a Peronist who refused to negotiate with the bondholders, argued Macri was selling out to Wall Street investors by offering repayment terms of 70-75 cents on the dollar.
Former Economy Minister Axel Kicillof blasted the government’s proposal to finance the accords brokered in New York with a planned $11.68 billion bond issuance, saying it would increase government debt.
“We’re not increasing debt. We’re decreasing it,” Mario Negri, a senior lawmaker in Macri’s Let’s Change alliance, said minutes ahead of the vote, referring to the write down on outstanding debt agreed with investors.
Among the agreements negotiated in New York is a $4.65 billion cash payment to the main holdout creditors, including billionaire Paul Singer’s Elliott Management. Argentina has until April 14 to make the payment.
Macri garnered enough votes to push the vote through the lower chamber after making last minute concessions to secure the support of dissident Peronist Sergio Massa and his lawmakers, plus a group of legislators which split with Fernandez last month.
They won the insertion of a collective action clause, which requires creditors to negotiate together for any changes in bond payment terms, and a cap of $12.5 billion on the bond sales, according to state-run news agency Telam.
Massa said it was now time for lawmakers to debate matters important to him: inflation, the income tax threshold and pensions.
The bill now moves to the Senate, where the opposition’s majority is dogged by internal divisions and Macri will expect to leverage support in return for government funds and access to lower borrowing costs to finance much-needed infrastructure projects.
The dispute stems from Argentina’s default on $100 billion in bonds in 2002. The holdout creditors rejected 2005 and 2010 debt swaps that offered 30 cents on the dollar.
Editing by Chizu Nomiyama and W Simon